Multinational enterprises and Sustainable Development Goals: A foreign subsidiary perspective on tackling wicked problems

Abstract

To address the unique challenge facing multinational enterprises (MNEs) in managing their foreign subsidiaries' implementation of Sustainable Development Goals (SDGs), we propose a framework based on the foreign subsidiary identity transitions driven by the competing demands of parent and local stakeholders. Our work provides policymakers with a framework to better understand the links between the changes in the institutional level and the MNE's strategy to attain SDG goals. The separate local identity driven by local stakeholder demands is conducive to the localized implementation of SDGs in the host country, while the subsidiary's identification with its parent MNEs plays a critical role in achieving SDGs that impact the operations of the company and their business networks like suppliers and customers. By linking subsidiary identity with SDGs, we identify mechanisms that can be adopted by the parent firms and subsidiaries to engage with SDGs in the host country as well as how parent firms can transfer better practices to their subsidiaries. As such, policymakers can identify SDG gaps in the local environment, and as MNEs establish processes engaging with local SDGs, policymakers can encourage MNEs in the policy uptake. Similarly, policymakers can support MNEs align their local context strategies with SDG gaps.

The UN’s Sustainable Development Goals: Can multinational enterprises lead the Decade of Action?

“…2. Dealing with complexity: Two papers explicitly use insights from 'wicked problems' and 'complexity' theory to make the link between MNE strategies and policies and institutional change (Eden & Wagstaff, 2021;Liou & Rao-Nicholson, 2021). Other contributions frame complexity by looking at possible interlinkages between SDGs and the so-called 'nexus challenge'.…”

“…Comparable advice on methodological approaches can be drawn from papers that focus on more general SDG analyses. Among others, they introduce an SDG gap analysis (Liou and Rao-Nicholson, 2021;Stephenson et al, 2021), SDG alignment analysis (Lewis et al 2021), and an approach towards SME governance of SDGs in general (Sinkovics et al, 2021) and in specific value chains (Van Holt et al, 2021).…”

“…Moreover, MNEs organize increasingly diffuse and decreasingly hierarchical networks. This means that (a) a core firm increasingly has to convince rather than cajole SDG uptake in its networks; and (b) innovations in how to internalize/operationalize SDGs may come from other network players, including linked SMEs (Sinkovics et al, 2021) and hostcountry subsidiaries (Liou & Rao-Nicholson, 2021).…”

“…The SDGs establish a framework to explore these issues systematically. For instance, Liou and Rao-Nicholson (2021) show that 'a subsidiary's separate local identity driven by local stakeholder demands is conducive to the localized implementation of SDGs in the host country, but its identification with its parent MNEs plays a critical role in achieving SDGs that impact the operations of the company as a whole'.…”

“…The papers by Lashitew (2021) and Eden and Wagstaff (2021) provide input for the latter. Most of the research papers deal with more qualitative aspects of the 'bargaining arena challenge', one way or another, for instance by referring to value chains (Sinkovics et al, 2021;Van Holt et al, 2021), production processes (Liou & Rao-Nicholson, 2021), or cross-sector partnerships (Ramirez, 2021;Lewis et al, 2021).…”