Abstract:

Our inductive study of nine European multinational enterprises (MNEs) and their R&D units in India uncovers a distinct trajectory of overseas R&D evolution, ubiquitous in emerging markets. In contrast to the well-known adaptation trajectory, the alternative trajectory is triggered by arbitrage motivation but over time evolves through stages to reach global product research. Our study presents how foreign R&D units build embeddedness within the MNE network and with the local ecosystem, and how such embeddedness influences the evolution of their R&D mandate, much more than the macro conditions. We present a stylized taxonomy of R&D configurations and integrate this into an evolutionary model of global R&D and suggest that MNE innovation research must shift from focusing on starting conditions to exploring the dynamics of embeddedness.