Dynamic capability development in multinational enterprises: Reconciling routine reconfiguration between the headquarters and subsidiaries

Monica Riviere, A. Erin Bass, Ulf Andersson

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

Research Summary: Starting from the premise that firms need dynamic capabilities to adapt to changing environments, we discuss how multinational enterprises (MNEs) develop dynamic capabilities from internationalization. Unlike domestic firms that develop dynamic capabilities within one organizational system, MNEs are inherently multi-level systems with the headquarters and subsidiaries. In this paper, we focus on how internationalization depth and breadth function as sources of learning and unlearning in the headquarters and subsidiaries, and how this serves as the antecedent for routine reconfiguration and dynamic capability development in the MNE. We theorize that the headquarters' and subsidiaries' brokering capabilities are critical for reconciling routine reconfiguration at the two levels so that dynamic capability development can occur, and the MNE can adapt to environmental changes. Managerial Summary: Our model of dynamic capability development in multinational enterprises (MNEs) via internationalization makes dynamic capabilities actionable for managers in three main ways. First, we emphasize both learning and unlearning from internationalization as important for both the subsidiaries and headquarters to reconfigure routines to adapt to changing environments. Second, the routine reconfiguration that occurs from the subsidiaries or the headquarters serves as the impetus for dynamic capability development in the MNE. Third, for dynamic capability development to occur in the MNE, both the headquarters and the subsidiaries must be able to reconcile routine reconfigurations via the headquarters' and the subsidiaries' brokering capabilities.

Original languageEnglish (US)
Pages (from-to)380-401
Number of pages22
JournalGlobal Strategy Journal
Volume11
Issue number3
DOIs
StatePublished - Aug 2021

Keywords

  • dynamic capability development
  • internationalization
  • multinational enterprise
  • routine reconfiguration

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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