Capability Development within theMultinational Corporation

264 Pages·2013·5.22 MB·English

Department of Management and International Business
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Aalto University publication series
DOCTORAL DISSERTATIONS 13/2013
Capability Development within the
Multinational Corporation
Paula Kilpinen
Aalto University
School of Business
Department of Management and International Business
Aalto University publication series
DOCTORAL DISSERTATIONS 13/2013

© Paula Kilpinen

ISBN 978-952-60-4981-6 (printed)
ISBN 978-952-60-4982-3 (pdf)
ISSN-L 1799-4934
ISSN 1799-4934 (printed)
ISSN 1799-4942 (pdf)

Images: Cover, ©Nokia (girl), ©Kone (buildings), ©Fiskars (shop)

Unigrafia Oy
Helsinki 2013

Finland
Abstract
Aalto University, P.O. Box 11000, FI-00076 Aalto www.aalto.fi
Author
Paula Kilpinen
Name of the doctoral dissertation
Capability Development within the Multinational Corporation
Publisher School of Business
Unit Department of Management and International Business
Series Aalto University publication series DOCTORAL DISSERTATIONS 13/2013
Field of research International Business
Abstract
The operating environment is being shaped by globalization forces, rapid technological
change and intensified competition, which call for strategic changes and new capabilities from
multinational corporations. Even though the capability-based determinants to firm survival
and growth have been recognized, research on capability development has been limited. This
study investigates capability dynamics within MNCs and the interactions between strategy and
the environments internal and external to the firm. It puts forward longitudinal case studies of
three Finnish multinational firms, Nokia, Kone and Iittala, as they were undergoing strategic
changes, in order to explain how capabilities are developed within MNCsand how the MNC
context, including globalization, has an impact on capability development.
The findings explain how MNC strategies and activities trigger various mechanisms and
generate complex outcome patterns in capabilities. The findings indicate that the various
patterns or ‘logics’ by which the MNCs build capabilities can be regrouped into four main
logics: variation-based, (internal) selection-based, retention-based and access-based logics,
which represent patterned links between intra-firm evolutionary processes, dynamic
capabilities and capability development. This study demonstrates how the case firms employed
different capability logics at different periods of time in order to adapt to external changes, but
also to shape the external environment.
The findings also elucidate the ‘liability of complexity’ that the multinational corporations
encounter, as they possess complex internal and external selection environments and need to
respond to divergent external and internal pressures. This may create various forms of inertia
or counteracting mechanisms to capability development and may result in ‘indirect selection’
of certain capabilities with significant implications on firm performance. The study also
demonstrates how the advantages of the multinational firm increasingly relate to and are
augmented by its capacity to use not only the subsidiary network but also its global network of
partner firms, ‘enterprise ecologies’, to complement its internal capability base with co-
specialized assets.
This study extends current research by explicitly integrating the dynamic capabilities view
(DCV) and the evolutionary perspectives for a more holistic picture on capability development
within the MNC context. It also provides empirical evidence of the dynamic process of
capability development when subject to a global business environment of uncertainty and
complexity. The managerial implications of the study involve the capability logics that
managers may employ to cope with and to influence the external environment. They also relate
to identifying the various complexities within the MNC context and promote aligning the
internal selection criteria with strategy.
Keywords capability development, multinational corporations, dynamic capabilities,
evolutionary perspective, case studies
ISBN (printed) 978-952-60-4981-6 ISBN (pdf) 978-952-60-4982-3
ISSN-L 1799-4934 ISSN (printed) 1799-4934 ISSN (pdf) 1799-4942
Location of publisher Espoo Location of printing Helsinki Year 2013
Pages 259

Tiivistelmä
Aalto-yliopisto, PL 11000, 00076 Aalto www.aalto.fi
Tekijä
Paula Kilpinen
Väitöskirjan nimi
Kyvykkyyksien kehittäminen monikansallisissa yrityksissä
Julkaisija Kauppakorkeakoulu
Yksikkö Johtamisen ja kansainvälisen liiketoiminnan laitos
Sarja Aalto University publication series DOCTORAL DISSERTATIONS 13/2013
Tutkimusala Kansainvälinen liiketoiminta
Tiivistelmä
Globalisaatio, nopea teknologinen kehitys ja intensiivinen kilpailu ovat muokanneet
monikansallisten yritysten toimintaympäristöä, ja edellyttäneet niiltä strategiamuutoksia ja
uusia kyvykkyyksiä. Vaikka kyvykkyyksien vaikutus yritysten selviytymiseen ja kasvuun on
tunnistettu, niiden kehittymistä on tutkittu vain vähän. Tämä tutkimus selvittää
kyvykkyyksien kehittymistä monikansallisissa yrityksissä, tarkastelemalla strategian ja sekä
sisäisen että ulkoisen toimintaympäristön välistä vuorovaikutusta. Se esittelee
pitkittäisaineistoon perustuvat tapaustutkimukset Nokiasta, Koneesta ja Iittalasta niiden
toteuttaessa strategista muutosta. Tapausyritysten kautta selvitetään miten kyvykkyyksiä
kehitetään monikansallisissa yrityksissä, ja miten niiden konteksti, mm. globalisaatio,
vaikuttaa kyvykkyyksien kehittymiseen.
Tutkimustulokset selittävät miten monikansallisten yritysten strategia ja toiminta
laukaisevat eri mekanismeja ja synnyttävät monitahoisia kyvykkyysmalleja globaalissa
toimintaympäristössä. Tulokset osoittavat, että nämä erilaiset mallit voidaan ryhmittää
neljään päälogiikkaan, jotka sisältävät erilaisia kytköksiä yrityksen sisäisten kehitysprosessien,
dynaamisten kyvykkyyksien ja kyvykkyyksien kehittymisen välillä. Tutkimus osoittaa miten
tapausyritykset ovat käyttäneet eri kyvykkyysmalleja eri aikakausina sopeutuakseen ulkoisiin
muutoksiin, mutta myös muokatakseen ulkoista toimintaympäristöä.
Tutkimustulokset havainnollistavat myös sitä monimutkaisuuden rasitetta, joka seuraa
monikansallisten yritysten kompleksisesta toimintaympäristöstä sekä tarpeesta vastata
erilaisiin ulkoisiin ja sisäisiin paineisiin. Tämä aiheuttaa kyvykkyyksien kehittymistä
hidastavia tai sitä ehkäiseviä mekanismeja, sekä johtaa tiettyjen kyvykkyyksien epäsuoraan
valintaan, millä voi olla merkittävä vaikutus yrityksen tulokseen. Tämä tutkimus osoittaa myös
miten monikansallisten yritysten etulyöntiasema liittyy yhä enenevissä määrin niiden kykyyn
hyödyntää tytäryhtiöverkoston lisäksi yhteistyökumppaneiden verkostoaan, ’ekosysteemejä’,
täydentääkseen omaa kyvykkyyspohjaansa.
Tämä tutkimus laajentaa nykytutkimusta yhdistämällä dynaamisten kyvykkyyksien
tutkimuksen (DCV) ja kehitysopillisen perspektiivin, ja antaa siten kokonaisvaltaisemman
kuvan kyvykkyyksien kehittymisestä monikansallisten yritysten kontekstissa. Lisäksi se
tarjoaa empiiristä aineistoa kyvykkyysprosesseista yritysten toimiessa epävarmassa ja
kompleksisessa globaalissa ympäristössä. Tutkimus tarjoaa johtajille erilaisia
kyvykkyysmalleja, joita he voivat käyttää sopeutuakseen tai vaikuttaakseen ulkoiseen
toimintaympäristöön. Se myös auttaa identifioimaan monikansallisten yritysten kontekstiin
liittyviä kompleksisuuksia ja edesauttaa sisäisten valintakriteereiden linjaamista strategiaan.
Avainsanat kyvykkyyksien kehittäminen, monikansalliset yritykset, dynaamiset kyvykkyydet,
kehitysopillinen perspektiivi, tapaustutkimukset
ISBN (painettu) 978-952-60-4981-6 ISBN (pdf) 978-952-60-4982-3
ISSN-L 1799-4934 ISSN (painettu) 1799-4934 ISSN (pdf) 1799-4942
Julkaisupaikka Espoo Painopaikka Helsinki Vuosi 2013
Sivumäärä 259

Acknowledgements

PhD research is like a journey that you start without knowing what lies
ahead. Writing this thesis was truly a rich journey and I would like to thank
all the individuals that have made this voyage so special and who helped me
reach the final destination.
First and foremost, I would like to express my warmest thank you to my
supervisor and kustos, Professor Rebecca Piekkari. I admire you for your
values, your dedication, and the quality of your work that that is only
enhanced by your kind personality. Moreover, your expertise in qualitative
research, case research in particular, has been extremely valuable. You both
encouraged and challenged me in my methodological work, for which I feel
extremely grateful. Thank you for all the kind support that you have given.
Secondly, my great appreciation and gratitude go to the Scotiabank
Professor of International Business and Professor of Organization Studies
from Schulich School of Business at York University and Professor Emeritus
from MIT Sloan School of Management, Eleanor Westney, and to the
Chaired Professor of Strategic Management and Director at the Institute of
Management of the University of St. Gallen, Tomi Laamanen. I appreciate
your careful reading of my work as well as your encouraging and insightful
comments that reflect your deep knowledge of the field. It has been a great
honor to have you as my pre-examiners and I cannot thank you enough
Professor Westney for serving as my opponent on this special day.
I would also like to thank Professor Hannu Seristö, Professor Markku
Salimäki, Professor Asta Salmi and Professor Elizabeth Rose and others
from the International Business Faculty who have provided me with
support during the course of my journey. A special thank you also goes to
Professor Stuart MacDonald and Dr. Peter Zettinig for astute comments.
Those individuals in the academic community who have given me valuable
comments during seminars and conferences are far too numerous to
mention but I would like to express my appreciative thanks to you all. The
TEKES LIITO Response project was central in the data collection phase and
I would like to thank Professor Mika Gabrielsson and Dr. Anna Salonen for
all their important work in administrating the project as well as the project
members for joint data collection work.
A very special thank you goes to Markus Paukku. It was a great pleasure to
work with you, I have really appreciated our inspiring discussions, joint
research and the conference trips we made. The Great Wall of China at
sunrise and the sunny mountain peaks at Steamboat Springs, Colorado,
were definitely the highlights of this journey. You made this trip really fun!
Another very special thank you goes to Kristiina Mäkelä. I am so glad our
paths crossed again. Without you I would never have undertaken this
project, so you are THE person to thank (or blame). Thank you for reading
(and re-reading) my work and for giving such useful advice. You are truly a
generous person and a dear friend. A warm thank you also goes to my
doctoral peers, Terhi Vapola, Jody Wren, Arno Kourula, Irina Jormanainen,
Tiina Ritvala, and others. It has been a real pleasure to get to know you.
I truly appreciate all the time devoted by the individuals in the case
companies, especially at Nokia, Kone and Iittala. The interviews were highly
inspirational and insightful, and some of them set the study on a new
course. I sincerely feel privileged and thankful. Moreover, this work would
not have been possible without the support from the Finnish Funding
Agency for Technology and Innovation (TEKES), the Helsinki School of
Economics Foundation, the Foundation for Economic Education, the
KAUTE Foundation, the Dr.h.c. Marcus Wallenberg for Promoting
Research in Business Administration and the Jenny and Antti Wihuri
Foundation.
Finally, my dearest thanks go to those closest to me, family and friends. To
my parents Terttu and Paavo, who have taken me and my sisters to live in
the most curious places on the globe ever since I was a child and thereby
planted the seeds for an interest in international business studies, but who
have also always been there for me and who have encouraged me to take on
new challenges. To you I devote this thesis and I wish, Dad, that you had
lived to see this day. My parents-in-law Riitta and Pauli, you have never
hesitated to offer your precious help at any occasion. Thank you Reidun and
Taryn for going the extra mile when ever needed, especially in the later
stages of the project.
My deepest love goes to my husband Petteri, and my sons Okko, Topi,
Tuukka, Osku and Kalle. You reminded me that it was not the destination
that was the most important but the journey itself. Citing Robert Frost I
have the feeling of having taken the road less traveled by, and although I do
not know where it will lead I can certainly say that it has made all the
difference.

Espoo, December 2012

Paula Kilpinen

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