This paper seeks to understand the conditions under which 'centers of excellence' emerge in foreign subsidiaries of multinational firms. We define a center of excellence as an organizational unit that embodies a set of capabilities that has been explicitly recognized by the firm as an important source of value creation, with the intention that these capabilities be leveraged by and/or disseminated to other parts of the firm. Drawing on overlapping research in international business and strategic management, we argue that the formation of centers of excellence is shaped by conditions in the subsidiary's local environment as well as by various aspects of the subsidiary's relationship with other parts of the multinational firm. Based on a survey of 99 foreign units in Canada, our results highlight the fundamental role played by parent firm investment as well as the role of internal and external organizations in the development of subsidiary capabilities. Performance implications of the center of excellence phenomenon are also explored.
Discusses how interrelationships can be developed for synergy. Also focuses on horizontal strategy as a way to achieve competitive advantage. Organizational context can determine a firm’s motivation and ability to develop interrelationships that result in overall competitive advantage. Corporate strategy must move beyond the idea that the primary way of creating synergy is the combination of related businesses (by buying and selling businesses). Corporate strategy must focus on creating value that is independent of business unit value. This means developing horizontal strategies that have the objective of coordinating activities and developing programs that encourage the sharing of resources and skills. An understanding of the horizontal organization helps to emphasize that organizational structure and processes are significant in developing interrelationships with the potential to reach the goals of synergy and competitive advantage.
This paper presents the findings from a qualitative study on the extent to which three dimensions of proximity -geographic, cognitive, and organisational -impact knowledge transfer and innovation post-merger and acquisition (M&A). Findings show that the elements of proximity substantially influence both knowledge transfer and innovation although the nature of the impact varies and is influenced by the type of management interventions or lack thereof post-M&A.Keywords: proximity; knowledge transfer; mergers and acquisitions; M&A; technology management; innovation; post-M&A.Reference to this paper should be made as follows: Ensign, P.C., Lin, C-D., Chreim, S. and Persaud, A. (2014) Samia Chreim is an Associate Professor in the Telfer School of Management at the University of Ottawa. Her research interests include the areas of mergers and acquisitions, cross-organisational collaborations, and change management. She has studied these topics in the fields of healthcare, financial services, engineering and information technology. Her most recent research attends to the notion of boundaries at different levels of analysis.Ajax Persaud is an Associate Professor in the Telfer School of Management at the University of Ottawa. His research focuses on the commercialisation of new technologies, R&D and innovation management, new product development, technology adoption, and e-business. He has received a number of nominations and awards for teaching and research excellence. He has provided management consulting services to small and medium companies and community organisations in Canada and the Caribbean. He has also delivered executive education courses in innovation management, marketing, and e-business to executives of small, medium, and large multinational corporations in Canada, the Caribbean and Europe.
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