Dynamic capabilities in MNCs: subsidiary international business competence in the Finnish-Russian context

Abstract

What competencies do companies need to develop in order to internationalise successfully? In this paper our focus is on the dynamic capabilities and, particularly, international business competence of the Russian subsidiaries of Finnish multinational corporations (MNCs) operating in the rapidly changing market. By analysing the internationalisation process of two Finnish MNCs, and especially their (small) subsidiaries' internationalisation process in Russia, we seek to illustrate the international business competence development of subsidiaries. Small and medium-sized enterprises need international business competence in order to handle export activities or internationalise. Here we explore how the development of international business competence in the subsidiaries of MNCs occurs and to what extent the subsidiaries should possess international business competence in order to operate successfully. Our results indicate that the underlying dynamic is that MNC subsidiaries derive advantages from their local presence and local employees, advantages unique to the MNC subsidiary environment, advantages that facilitate the high level of international business competence. Our main contribution is to bring out the interplay between the parent company and the small subsidiary in international business competence literature. Furthermore, we extend the knowledge on the internationalisation of MNCs from developed economies entering Russia.