Innovation Processes in the Russian Manufacturing Subsidiaries of Multinational Corporations: An Integrated View from Case Studies

Abstract

The extant literature acknowledges the role of overseas subsidiaries in the growth and development of multinational companies (MNCs). Such subsidiaries are viewed as critical players in the innovation process at MNCs. This topic remains largely underresearched in the Russian context. This study aims to fill this gap by examining the dynamics of the innovation process in Russianbased subsidiaries of global MNCs. We present qualitative findings that indicate Russian subsidiaries are not only recipients of knowledge and technology developed elsewhere in the MNCs but are active developers of innovative products and solutions.

Combining Contemporary and Soviet‐Era Management Practices to Achieve Excellence at Knauf CIS

“…At first glance, the case of Knauf CIS seems to reflect the theme of a 2012 book by Vijay Govindarajan and Chris Trimble, Reverse Innovation: Create Far From Home, Win Everywhere. It also serves as a prime example of the experiences of other previously studied multinational corporations in Russia (Gurkov & Filippov, 2013). In all these cases, Western multinational corporations, including such giants as PepsiCo and smaller companies like French Lactalis and Italian Mapei, were able to combine worldwide standards of product quality and reliability of production processes with local ingenuity and a desire to break the rules imposed by foreign engineers.…”

Rituals of opening ceremonies of overseas manufacturing facilities of multinational corporations in Russia

“…For overseas manufacturing, such uncertainty is reinforced by differences between job attitudes and working culture of employees in the home country of the corporate parent and employees in the new country. Gurkov and Filippov (2013, p. 270) presented an excerpt from an interview with a factory manager at a Belgian Corporation's Russian subsidiary:

“We achieved compliance with the quality requirements of our customers only on the third attempt. The parent company was ready to give up the whole project …”

As there can be a prolonged period of test production lots, allowing for the newly built facility to achieve the minimally acceptable level of operating efficiency and suitable production quality, we can make a second proposition regarding plant‐opening ceremonies:Proposition Many elements of plant‐opening ceremonies, especially symbolic actions of “putting new facilities in motion,” are merely public performance; both sides know that the real operational commencement happened months earlier.…”

Perspectives of Manufacturing Subsidiaries of Foreign Companies in Russia: Frontier, Faubourg or Sticks?

“…corporate practice status when Russian-designed technologies and methods were applied at the parent company's other facilities, for example, in the United States [Gurkov, Filippov, 2013]; • the "cascade" development of Russian production facilities, with "launch teams" comprised of the most highly skilled engineers and workers being transferred, on a temporary or permanent basis, from the international corporation's existing Russian facilities to the newly launched factories [Gurkov, 2014]; • fully matured behavioral standards for the staff of Russian subsidiaries of Western companies in order to employ world-level work practices (attention to detail, production discipline, health and safety norms, highly dynamic production processes, constantly learning new knowledge and skills). These behavioral standards were encouraged and promoted by the stability-oriented HR management system adopted by such companies (the preferred use of permanent employment contracts, an emphasis on a guaranteed proportion of remuneration (as opposed to bonuses), strict adherence to stringent health and safety norms, a broad range of compensation benefits, etc.)…”