This paper investigates the relationship between [MNC] coordination mechanisms and subsidiary new product
development [NPD] activities. We focus on two essentially different coordination mechanisms, internal markets
and global decision-making autonomy, and argue that both mechanisms are likely to increase a subsidiary’s
exposure to market forces which, in turn, provides different kinds of incentives for a subsidiary’s in-house NPD
and NPD outsourcing. We tested our hypotheses using structural equations modeling. The results suggest that
internal markets have a positive effect on NPD outsourcing while global autonomy has a positive effect on inhouse
NPD. Thus, this study contributes to integrating the internal market construct with the coordination
mechanism stream of literature.
