Management International Review

, Volume 58, Issue 4, pp 633–661 | Cite as

From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets

  • Srivardhini K. JhaEmail author
  • Charles Dhanaraj
  • Rishikesha T. Krishnan
Research Article


Our inductive study of nine European multinational enterprises (MNEs) and their R&D units in India uncovers a distinct trajectory of overseas R&D evolution in emerging markets. In contrast to the well-established trajectory of foreign R&D evolution that begins by adapting existing MNE products to the local market, this alternative trajectory begins by leveraging cost arbitrage and progresses through three unique configurations towards a global product mandate. Our study also unravels how the R&D units build embeddedness within the MNE network and with the local ecosystem, and how such embeddedness influences the evolution of their R&D mandate. We present a stylized taxonomy of R&D configurations and integrate this into an evolutionary model of emerging market R&D and suggest that research on MNE R&D in emerging markets must shift from focusing on the macro environment to exploring the dynamics of embeddedness. The study also provides useful insights to practitioners on managing R&D in emerging markets.


Multinational R&D Emerging markets Innovation Embeddedness Cost arbitrage Competence creation 



This study was partly funded by European Community’s Seventh Framework Programme under Grant Agreement Number 217296 (GlobInn: The changing nature of Internationalization of Innovation in Europe: impact on firms and the implications for innovation policy in the EU). We are thankful for this support.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  • Srivardhini K. Jha
    • 1
    Email author
  • Charles Dhanaraj
    • 2
  • Rishikesha T. Krishnan
    • 3
  1. 1.Indian Institute of Management BangaloreBangaloreIndia
  2. 2.Fox School of BusinessTemple UniversityPhiladelphiaUSA
  3. 3.Indian Institute of Management IndoreIndoreIndia

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