Intersubsidiary relationships and internationalization processes of multinational companies

Abstract

Grounded on the conceptualisation of multinational companies as networks of knowledge flows, this article aims to examine the influence of intersubsidiary relationships on the internationalization process of multinational companies. It begins by reviewing theoretical and empirical works that claim that knowledge of internationalization is generated and selected in the relationships between headquarters and the focal subsidiary as well as in the interorganisational relationships of multinational companies. Subsequently, one develops the idea that the internationalization of multinationals is also dependent on knowledge generated and selected in intersubsidiary relationships. Illustrated by a case of an internationalization process of a British firm in the Brazilian market, the article suggests two new hypotheses for future test. The first one deals with the magnitude of exporting/ importing of knowledge and the geographical scope of the subsidiaries that are, respectively, senders/receivers of this knowledge. The second hypothesis brings dynamics to the first one by considering the time variable. Finally, one advances the idea that the internationalization of multinationals is the result of non-linear combinations in space and in time of knowledge generated and selected in intersubsidiary relationships.