Abstract
In the past two decades, globalization of innovation has accelerated. Subsidiaries of multinational enterprises are playing a very important role in the globalized innovation value chain . Foreign Direct Investment (FDI) flow to developing countries like India and China has increased substantially in the past 5 years. In light of this, the study of subsidiaries and their contribution to global innovation in these economies is very important and relevant. This chapter illustrates the use of a qualitative approach known as Total Interpretive Structural Modelling (TISM) to model the macro factors responsible for R&D Subsidiary Innovation (SI) in the Indian semiconductor design subsidiaries and structure them to better understand the interplay of these factors. Implications for practitioners and researchers are highlighted. Understanding the factors that impact R&D subsidiary innovation in India is helpful in understanding the role of subsidiaries from developing economies in the innovation value chain .
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Appendices
Appendix 1: Reachability Matrices
Reachability Matrix for ST Factors
S1 | S2 | S3 | S4 | S5 | S6 | S7 | |
|---|---|---|---|---|---|---|---|
S1 | 1 | 0 | 1 | 0 | 1 | 1 | 0 |
S2 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
S3 | 0 | 0 | 1 | 0 | 0 | 1 | 0 |
S4 | 1 | 0 | 1 | 1 | 1 | 1 | 1 |
S5 | 1 | 1 | 1 | 0 | 1 | 1 | 0 |
S6 | 0 | 0 | 1 | 0 | 0 | 1 | 0 |
S7 | 0 | 0 | 0 | 1 | 1 | 0 | 1 |
Reachability Matrix for HS Factors
H1 | H2 | H3 | H4 | H5 | |
|---|---|---|---|---|---|
H1 | 1 | 1 | 0 | 1 | 1 |
H2 | 1 | 1 | 1 | 1 | 1 |
H3 | 0 | 0 | 1 | 1 | 0 |
H4 | 0 | 0 | 1 | 1 | 0 |
H5 | 0 | 0 | 0 | 1 | 1 |
Reachability Matrix for LE Factors
L1 | L2 | L3 | |
|---|---|---|---|
L1 | 1 | 1 | 1 |
L2 | 1 | 1 | 1 |
L3 | 1 | 1 | 1 |
Appendix 2: Partitioning the Reachability Matrix into Different Levels
ST Factors
Variable | Reachability set | Antecedent set | Intersection set | Level |
|---|---|---|---|---|
RM level partitioning—iteration 1 | ||||
S1 | 1,3,5,6 | 1,2,4,5,6 | 1,5,6 | |
S2 | 1,2,3,4,5,6,7 | 2,3,5,6 | 2,3,5,6 | |
S3 | 3,6 | 1,2,3,4,5,6 | 3,6 | 1 |
S4 | 1,3,4,5,6,7 | 2,3,4,7 | 3,4,7 | |
S5 | 1,2,3,5,6 | 1,2,3,4,5,7 | 1,3,5 | |
S6 | 3,6 | 1,2,3,4,5,6 | 3,6 | 1 |
S7 | 4,5,7 | 2,4,7 | 4,7 | |
RM level partitioning—iteration 2 | ||||
S1 | 1,5 | 1,2,4,5 | 1,5 | 2 |
S2 | 1,2,4,5,7 | 2,5 | 2,5 | |
S4 | 1,4,5,7 | 2,4,7 | 4,7 | |
S5 | 1,5 | 1,2,4,5,7 | 1,5 | 2 |
S7 | 4,5,7 | 2,4,7 | 4,7 | |
RM level partitioning—iteration 3 | ||||
S2 | 2,4,7 | 2 | 2 | 4 |
S4 | 4,7 | 2,4,7 | 4,7 | 3 |
S7 | 4,7 | 2,4,7 | 4,7 | 3 |
Summary of iteration steps | ||||
S3 | 3,6 | 1,2,3,4,5,6 | 3,6 | 1 |
S6 | 3,6 | 1,2,3,4,5,6 | 3,6 | 1 |
S1 | 1,5 | 1,2,4,5 | 1,5 | 2 |
S5 | 1,5 | 1,2,4,5,7 | 1,5 | 2 |
S4 | 4,7 | 2,4,7 | 4,7 | 3 |
S7 | 4,7 | 2,4,7 | 4,7 | 3 |
S2 | 2 | 2 | 2 | 4 |
For HS Factors
Variable | Reachability set | Antecedent set | Intersection set | Level |
|---|---|---|---|---|
RM level partitioning—iteration 1 | ||||
H1 | 1,2,4,5 | 1,2 | 1,2 | |
H2 | 1,2,3,4,5 | 1,2,3,4 | 1,2,3,4 | |
H3 | 3,4 | 2,3,4 | 3,4 | 1 |
H4 | 3,4 | 1,2,3,4,5 | 3,4 | 1 |
H5 | 4,5 | 1,2,5 | 5 | |
RM level partitioning—iteration 2 | ||||
H1 | 1,2,5 | 1,2 | 1,2 | |
H2 | 1,2,5 | 1,2 | 1,2 | |
H5 | 5 | 5 | 5 | 2 |
RM level partitioning—iteration 3 | ||||
H1 | 1,2 | 1,2 | 1,2 | 3 |
H2 | 1,2 | 1,2 | 1,2 | 3 |
RM level partitioning—iteration 1–3 | ||||
H3 | 3,4 | 2,3,4 | 3,4 | 1 |
H4 | 3,4 | 1,2,3,4,5 | 3,4 | 1 |
H5 | 5 | 5 | 5 | 2 |
H1 | 1,2 | 1,2 | 1,2 | 3 |
H2 | 1,2 | 1,2 | 1,2 | 3 |
For LE Factors
Variable | Reachability set | Antecedent set | Intersection set | Level |
|---|---|---|---|---|
RM level partitioning—iteration 1 | ||||
L1 | 1,2,3 | 1,2,3 | 1,2,3 | 1 |
L2 | 1,2,3 | 1,2,3 | 1,2,3 | 1 |
L3 | 1,3,3 | 1,2,3 | 1,2,3 | 1 |
Appendix 3: Initial Digraphs
For ST Factors
For HS Factors
For LE Factors
Appendix 4: Direct Interaction Matrices
For ST Factors
S1 | S2 | S3 | S4 | S5 | S6 | S7 | |
|---|---|---|---|---|---|---|---|
S1 | Allows freedom to experiment and own additional work areas | Ability to acquire diverse and more knowledge | Because of resource scale-up and allows better risk management | ||||
S2 | By influencing HQ, prioritizing effort versus resource and not exposing all resource details to HQ | By motivating and setting aggressive targets | By goal setting and work culture | Due to encouragement to acquire external knowledge | Global recognition of leader’s accomplishments | Mandatory trait for leaders | |
S3 | Motivated workforce | ||||||
S4 | Resource sharing and synergistic work | Motivated employees | Knowledge sourcing and sharing across the team | Ability to dip into expert resources | Need for frequent interaction | ||
S5 | Strategic resource building | Employees motivated to contribute at higher levels | Visibility into newer products and methods | ||||
S6 | High employee/team confidence and morale | ||||||
S7 | Facilitate closer interaction | Helps identify and grow knowledge |
For HS Factors
H1 | H2 | H3 | H4 | H5 | |
|---|---|---|---|---|---|
H1 | Higher stakes involved | Higher spending | Budget allocation for expatriation | ||
H2 | Builds subsidiary capability and credibility | Inverse relationship | Direction setting and assessment of subsidiary capabilities | Desire for tighter control | |
H3 | Local decision-making | ||||
H4 | Influences organizational culture | ||||
H5 | Better influencing at HQ |
For LE Factors
L1 | L2 | L3 | |
|---|---|---|---|
L1 | Local market intelligence enhances product customization | Access to local resources | |
L2 | Encouraging and forcing customization | ||
L3 | Through social networks |
Appendix 5: Model Assessment by Experts
TISM-ST Model Assessment
S. No. | Variables linked | Reason quoted by previous experts | E1 | E2 | E3 | Link average score | Model average score |
|---|---|---|---|---|---|---|---|
1 | Slack resources impacts/affects self-determination | Allows freedom to experiment and own additional areas | 3 | 4 | 4 | 3.67 | 3.90 Accept the model |
2 | Slack resources impacts/affects knowledge dynamic capability | Ability to acquire diverse and more knowledge | 3 | 4 | 4 | 3.67 | |
3 | Slack resources impacts/affects subsidiary credibility | Because of resource scale-up and allows better risk management | 4 | 4 | 2 | 3.33 | |
4 | Subsidiary leadership impacts/affects slack resources | By influencing HQ, prioritizing effort versus resources and not exposing all resource details to HQ | 4 | 4 | 3 | 3.67 | |
5 | Subsidiary leadership impacts/affects self-determination | By motivating and setting aggressive targets | 5 | 3 | 5 | 4.33 | |
6 | Subsidiary leadership impacts/affects teamwork | By goal setting and work culture | 5 | 4 | 4 | 4.33 | |
7 | Subsidiary leadership impacts knowledge dynamic capability | Due to encouragement to acquire external knowledge | 5 | 4 | 4 | 4.33 | |
8 | Subsidiary leadership impacts/affects subsidiary credibility | Global recognition of leader’s accomplishment | 5 | 3 | 5 | 4.33 | |
9 | Subsidiary leadership impacts/affects communication | Mandatory trait for leaders | 5 | 4 | 5 | 4.67 | |
10 | Self-determination impacts/affects subsidiary credibility | Motivated work force | 4 | 4 | 3 | 3.67 | |
11 | Teamwork impacts/affects slack resources | Resource sharing and synergistic work | 5 | 4 | 3 | 4.00 | |
12 | Teamwork impacts/affects self-determination | Motivated employees | 4 | 4 | 4 | 4.00 | |
13 | Teamwork impacts/affects knowledge dynamic capability | Knowledge sourcing and sharing across the team | 4 | 4 | 4 | 4.00 | |
14 | Teamwork impacts/affects subsidiary credibility | Ability to dip into expert resources | 4 | 4 | 5 | 4.33 | |
15 | Teamwork impacts/affects communication | Need for frequent interaction | 3 | 4 | 4 | 3.67 | |
16 | Knowledge dynamic capability impacts/affects slack resources | Strategic resource building | 4 | 3 | 3 | 3.33 | |
17 | Knowledge dynamic capability impacts/affects self-determination | Employees motivated to contribute at higher levels | 4 | 4 | 3 | 3.67 | |
18 | Knowledge dynamic capability impacts/affects subsidiary credibility | Visibility into newer products and methods | 4 | 4 | 4 | 4.00 | |
19 | Subsidiary credibility impacts/affects self-determination | High employee/team confidence and morale | 4 | 4 | 3 | 3.67 | |
20 | Communication impacts/affects teamwork | Facilitates closer interaction | 4 | 4 | 5 | 4.33 | |
21 | Communication impacts/affects knowledge dynamic capability | Helps identify and grow knowledge | 2 | 4 | 4 | 3.33 |
TISM-HS Model Assessment
S. No. | Variables linked | Reason quoted by previous experts | E1 | E2 | E3 | Link average score | model average score |
|---|---|---|---|---|---|---|---|
1 | R&D investment impacts/affects HQ involvement | Higher stakes involved | 4 | 3 | 4 | 3.67 | 3.67 Accept the model |
2 | R&D investment impacts/affects subsidiary mandate | Higher spending | 3 | 3 | 3 | 3.00* | |
3 | R&D investment impacts/affects expatriate resources | Budget allocation for expatriation | 4 | 4 | 3 | 3.67 | |
4 | HQ involvement impacts/affects R&D investment | Builds subsidiary capability and credibility | 3 | 4 | 5 | 4.00 | |
5 | HQ involvement impacts/affects subsidiary autonomy | Inversely related | 4 | 3 | 2 | 3.00* | |
6 | HQ involvement impacts/affects subsidiary mandate | Direction setting and assessment of subsidiary capabilities by HQ | 4 | 3 | 4 | 3.67 | |
7 | HQ involvement impacts/affects expatriate resources | Desire for tighter control | 4 | 4 | 4 | 4.00 | |
8 | Subsidiary autonomy impacts/affects subsidiary mandate | Local decision-making | 5 | 4 | 4 | 4.33 | |
9 | Subsidiary mandate impacts/affects subsidiary autonomy | Organizational culture | 4 | 4 | 4 | 4.00 | |
10 | Expatriate resources impacts/affects subsidiary mandate | Better influencing at HQ | 4 | 4 | 2 | 3.33 |
TISM-LE Model Assessment
S. No. | Variables linked | Reason quoted by previous experts | E1 | E2 | E3 | Link average score | Model average score |
|---|---|---|---|---|---|---|---|
1 | Local embeddedness impacts/affects local market | Local market intelligence enhances product customization | 4 | 3 | 4 | 3.67 | 3.58 Accept the model |
2 | Local embeddedness impacts/affects local resources | Access to local resources | 3 | 3 | 4 | 3.33 | |
3 | Local market impacts/affects local embeddedness | Need for customization | 4 | 3 | 4 | 3.67 | |
4 | Local resources impacts/affects local embeddedness | Through social networks | 4 | 3 | 4 | 3.67 |
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Betaraya, D.M., Nasim, S., Mukhopadhyay, J. (2018). Modelling Subsidiary Innovation Factors for Semiconductor Design Industry in India. In: Connell, J., Agarwal, R., Sushil, Dhir, S. (eds) Global Value Chains, Flexibility and Sustainability. Flexible Systems Management. Springer, Singapore. https://doi.org/10.1007/978-981-10-8929-9_7
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