Journal of Business Research 100 (2019) 1–15

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

From supplier to center of excellence and beyond: The network position T

development of a business unit within “IKEA Industry”
Enrico Baraldia, , Milena Ratajczak-Mrozekb
⁎

a
Uppsala University, Department of Engineering Sciences, Ångströmlab, Lägerhyddsvägen 1, 751 21 Uppsala, Sweden
b
Poznań University of Economics and Business, Department of International Marketing, al. Niepodleglosci 10, 61-875 Poznań, Poland

ARTICLE INFO ABSTRACT

Keywords: This study aims to develop a more dynamic and relational view of centers of excellence (CoE) within multi-
Center of excellence national enterprises (MNEs), that is, business units with specific and highly valuable competencies and
IKEA knowledge, which are transferred and leveraged by other units of the MNE. We employ a longitudinal case study
International business to analyze how, between 1986 and 2014, an external supplier progressively became a CoE within IKEA and even
Multinational enterprise
improved this role, thereby becoming increasingly important for the MNE. Particularly, we develop a model
Network position
Poland
linking internal (resources, competencies, and structure) and external factors (exchange volumes, interorganizational
routines, mutual dependence, trust and commitment, and identities) with changed network positions, which, in turn,
define the intensity and importance of a CoE's role. Thus, the elements required to establish a CoE may not
originate from the MNE's core competencies, but may be extracted, recombined, and integrated externally from
the MNE's global supply network.

1. Introduction approach, which considers markets as sets of interconnected relation-

ships among actors exchanging resources and conducting inter-
“When I went to the American embassy for a visa and said that we are dependent activities (Håkansson & Snehota, 1995; Johanson &
travelling for consultancy purposes, they stared at us in disbelief that we Mattsson, 1992).
[from Poland] are going there to teach them.” Within the MNE's internal network, subsidiaries are no longer
(Respondent R28) viewed as simply “the periphery” (Holm & Pedersen, 1999), relegated
to low-value adding activities, but as important contributors of
The aforementioned quote from a manager of IKEA Industry
knowledge, innovations, and value creation to the entire MNE
Zbąszynek, a business unit located near Poznan, indicates the important
(Asmusen, Pedersen, & Dhanaraj, 2009; Frost, Birkinshaw, & Ensign,
position assumed by this unit within the global network of the multi-
2002; Holm, Holmström, & Sharma, 2005; Lo, 2016). The growing
national IKEA, and, particularly, its production arm, IKEA Industry. As
importance of subsidiaries within MNEs' structures is manifested
per Buckley (2014, p. 238), “four relatively new applications of inter-
through the emergence of “centers of excellence” (CoEs), that is, busi-
nalization theory are likely to endure into the next decade,” and net-
ness units with specific and highly valuable competencies and knowl-
worked multinationals are considered as one among those applications.
edge, which are transferred and leveraged by other units of the MNE
This network view is reflected in the concept of the “global factory”
(Andersson & Forsgren, 2000; Frost et al., 2002; Holm & Pedersen,
(Buckley, 2009, 2014) and the “networked MNE model,” in which the
1999; Moore, 2001; Moore & Birkinshaw, 1998; Reger, 2004).
multinational enterprise (MNE) is seen as a differentiated network of
The MNE literature mainly analyzes CoEs that are explicitly re-
subsidiaries (Andersson & Forsgren, 2000; Ghoshal & Bartlett, 1990;
cognized or formally declared as such by the headquarters (e.g.,
Ghoshal & Nohria, 1989). This model emphasizes the importance of
Adenfelt & Lagerström, 2008; Frost et al., 2002; Gonzalez, Martins, &
both internal relationships and networks within MNEs (between the
Toledo, 2014), rather than emergent CoEs that assume this role through
headquarters and subsidiaries) and the external relationships and net-
external pressures that grant a special position and competencies to a
works of each subsidiary (e.g., involving external suppliers and custo-
business unit. Further, most analyses of CoEs focus on established
mers). Therefore, the networked MNE model is connected with net-
subsidiaries that became CoEs (e.g., Adenfelt & Lagerström, 2008; Frost
works, as conceived by the Industrial Marketing and Purchasing (IMP)
et al., 2002; Reger, 2004). However, there are other paths that might

⁎
Corresponding author.
E-mail addresses: enrico.baraldi@angstrom.uu.se (E. Baraldi), milena.ratajczak@ue.poznan.pl (M. Ratajczak-Mrozek).

https://doi.org/10.1016/j.jbusres.2019.03.008
Received 27 December 2017; Received in revised form 1 March 2019; Accepted 3 March 2019
0148-2963/ © 2019 Elsevier Inc. All rights reserved.
E. Baraldi and M. Ratajczak-Mrozek
lead to the establishment of a CoE, and an example could be an entity
that did not start as a subsidiary, but as an independent external sup-
plier.
One additional gap in the existing literature is that it mostly as-
sumes a binary and, hence, a more static view of CoEs, focusing on the
dichotomy between having superior competencies, and, thereby, being
a CoE or not (e.g., Ensign, Birkinshaw, & Frost, 2000; Frost et al., 2002;
Gonzalez et al., 2014; Reger, 2004). Even if the emergence of a CoE is
discussed in the literature, it mainly refers to ex-ante factors, that is,
initial conditions that contribute toward the creation of a CoE
(Andersson & Forsgren, 2000; Birkinshaw & Hood, 1998; Frost et al.,
2002; Holm & Pedersen, 1999). However, a CoE may not be confined to
a single static “label,” and the importance of the role of the unit as a
CoE can change with time; over a period, it may become a CoE to a
greater or lesser extent. Thus, rather than considering a CoE as a single
static “label,” it can be viewed as an organization playing a role in re-
lation to other counterparts within the MNE network; this role of
competence developer and broker can be played with either more or
less intensity and impact. Moreover, in this way, CoE can become a
dynamic and relational concept. Therefore, it is essential to have a
deeper understanding in terms of the degree to which a unit acts as a
CoE and, consequently, it is important to understand its degree of im-
portance to and value for the MNE while examining the changes in this
degree of “keyness” following its transformation as a CoE. Accordingly,
there is a need to expand the theoretical scope of CoEs from the issue of
being appointed as a CoE to the dynamics resulting from changing
positions in the internal and external network of an MNE. The in-
troduction of the notion of the “degree” of importance and value of a
CoE is a relevant contribution to the extant MNE literature because it
suggests that a business unit may improve (or worsen) its role as a CoE
over time.
Finally, even if the MNE literature recognizes that both the internal
and external relationships of a subsidiary are important for its emer-
gence as a CoE, it mainly adopts the perspective of the entire MNE,
focusing on the development and benefits gained by the MNE itself and
its headquarters (e.g., Andersson & Forsgren, 2000; Asmusen et al.,
2009; Borini & Fleury, 2011). Therefore, there is a need for studies that
explicitly take the perspective of a specific subsidiary both before and
after it becomes a CoE.
To bridge the indicated literature gaps, we conducted a case study
covering a period of nearly three decades (1986–2014) during which a
supplier of IKEA, comprising three Polish factories located in the
Poznan area, progressively became a CoE within the multinational IKEA
Industry, under the name of “IKEA Industry Zbąszynek.” During the
analyzed period, the organization evolved from being an independent
supplier, among many other IKEA suppliers, to becoming a pivotal
production center, playing the role of an efficient manufacturer, to
being more progressively integrated within IKEA's production-related
network, and culminating into a de facto center of excellence; however,
the supplier was not assigned this position officially. We find that this
change corresponds closely with the changes in the network position
(Håkansson & Snehota, 1995) of this business unit. Within the IMP
perspective, the network position is a multidimensional concept that
indicates how an organization is embedded in the surrounding network
in terms of the number and quality of its business relationships as well
as the connections between them (Håkansson & Snehota, 1995;
Johanson & Mattsson, 1992). The uniqueness of this case is that most
players in the analyzed industry treat Polish firms as high-quality and
cost-effective producers but not as centers for the most modern tech-
nology and research and development.
Against this background, this study aims to find new facets of the
CoE phenomenon by stressing its dynamic and relational nature in a
broader network context. Our study shows that such facets as changes
in the degree of importance/value of a CoE can be better understood by
looking at the focal unit's network position. Therefore, in order to ad-
dress this purpose, we pose the two research questions below:
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Journal of Business Research 100 (2019) 1–15
RQ1: How does the network position of a specific business unit af-
fect its emergence as a CoE and its subsequent degree of importance and
value for the MNE?
RQ2: Which factors, internal and external to the business unit, affect
its network position?
Our intention is not to develop the notion of network position
conceptually, but to apply this concept to understand the emergence
and development of CoEs and thereby contribute to the con-
ceptualization of CoEs. Particularly, we show that CoE is a relational
concept and the emergence of a CoE is a dynamic process.
The paper is organized as follows. First, we provide a theoretical
background of the concepts of center of excellence in MNE theories and
of network position from an IMP perspective. Particularly, we oper-
ationalize the concept of network position based on the IMP literature
in order to be able to apply it in a concrete empirical setting.
Subsequently, we describe our methodology, followed by the case
featuring the changes in the focal unit's network position. The case is,
subsequently, analyzed by identifying and synthetizing the key factors
that led the peripheral unit to assume a central position within IKEA's
global network into a model. We conclude the paper with managerial
implications and suggestions for further research.
2. Theoretical background
2.1. Multinational enterprises as networks including centers of excellence
An MNE is increasingly viewed as a differentiated network (Nohria
& Ghoshal, 1997), with the parent firm still playing the most important
role such as undertaking decisions regarding location and inter-
nalization–externalization. However, particularly, the “networked MNE
model” (Andersson & Forsgren, 2000; Ghoshal & Bartlett, 1990;
Ghoshal & Nohria, 1989) recognizes the important role of subsidiaries
in an MNE, owing to their internal (within the MNE) and external
(outside the MNE) interconnected relationships and own networks. The
networked MNE model recognizes that competencies may be developed
both in the headquarters and subsidiaries (Foss & Pedersen, 2004).
These competencies and knowledge developed in the subsidiaries gain
competitive advantage and superior returns for the entire MNE
(Asmusen et al., 2009; Borini & Fleury, 2011; Holm et al., 2005; Lo,
2016). An expression of the growing importance of subsidiaries in
MNEs' structures is manifested through “centers of excellence” (CoE)
(Andersson & Forsgren, 2000; Frost et al., 2002; Holm & Pedersen,
1999; Moore, 2001; Moore & Birkinshaw, 1998; Reger, 2004).
Although CoEs are said to be increasingly common in the networked
MNE structure (Adenfelt & Lagerström, 2008; Gupta & Govindarajan,
2000), there is no widely accepted and precise definition of such cen-
ters. First, there is a lack of common agreement whether CoE refers to a
whole business unit, a subsidiary (Adenfelt & Lagerström, 2008;Frost
et al., 2002; Holm & Pedersen, 1999), a set of activities (Ensign et al.,
2000), a best practice (Moore, 2001; Moore & Birkinshaw, 1998) within
a subsidiary, or a geographic location (Andersson & Forsgren, 2000).
The second inconsistency regarding definitions of CoEs concerns the
output that determines its “excellence.” In this regard, definitions
mention capabilities and competencies (Ensign et al., 2000; Frost et al.,
2002), knowledge (Adenfelt & Lagerström, 2008; Andersson &
Forsgren, 2000; Moore, 2001; Moore & Birkinshaw, 1998; Reger, 2004),
value creation, and competitive advantage (Frost et al., 2002; Holm &
Pedersen, 1999).
Irrespective of the aforementioned differences, the first important
feature of a CoE constitutes the creation and dissemination of superior
quality knowledge, competencies, or other advantages. A CoE must be
excellent in certain areas. However, it is not sufficient to have superior
quality, but it must also be valued by the headquarters and the other
units of the networked MNE. The knowledge or competencies devel-
oped must be recognized by the MNE's headquarters as unique (Holm
et al., 2005) or at least important to share with the other units of an
E. Baraldi and M. Ratajczak-Mrozek
MNE (Adenfelt & Lagerström, 2008; Frost et al., 2002). The distinct
competencies give a CoE a competitive advantage over competitors in
the marketplace or other business units (Holm & Pedersen, 1999). The
second important feature of a CoE relates to the actual use and dis-
semination of its superior competencies, knowledge, or value among
other units of an MNE. In this context, “recognition refers to the
widespread understanding and acceptance of the subsidiary's specia-
lized resources in other parts of the MNE” (Birkinshaw, Hood, &
Jonsson, 1998, p. 224). There is a focus on the need for a formal and
explicit recognition or appointment of a subsidiary as a CoE (Adenfelt &
Lagerström, 2008; Frost et al., 2002). However, as Moore (2001, p. 282)
puts it, “A CoE is, generally, formally recognized within the MNE,
though formal recognition is not necessary.” The recognition should
rather imply an ongoing commitment by the headquarters to invest in
the development of the center (Ensign et al., 2000) and the intention to
derive value from that subsidiary's competencies for the MNE (Frost
et al., 2002).
In this study, we perceive a CoE as a business unit with specific and
highly valuable competencies and knowledge, which, even without
explicit recognition or appointment by the headquarters, are trans-
ferred and leveraged by other units of the MNE.
2.2. The factors and relationships behind the establishment of a center of
excellence
After a subsidiary's internal resources, competencies, and en-
trepreneurial efforts (Andersson & Forsgren, 2000; Birkinshaw & Hood,
1998), the important factors behind the establishment of a CoE are
relationships, which embrace both internal relationships with the
parent firm and other subsidiaries/business units within the same MNE,
and external relationships with entities in the local business environ-
ment (Andersson & Forsgren, 2000; Birkinshaw et al., 1998; Frost et al.,
2002; Holm et al., 2005; Holm & Pedersen, 1999).
Internal relationships that influence the establishment of a business
unit as a CoE are the relationships with the parent firm or the head-
quarters and those with other business units of an MNE. The relation-
ship with headquarters serves as a source of both tangible and in-
tangible resources. Birkinshaw and Hood (1998) recognize parent-
driven investments as important for a subsidiary to develop appropriate
capabilities. A headquarters' capital investments in a unit may even-
tually lead to appointment and recognition of the unit as a CoE (Ensign
et al., 2000; Frost et al., 2002). Relationships with the parent firm also
lead to capability development (Rugman & Verbeke, 2001) and pro-
mote knowledge flows (Frost et al., 2002), although Frost et al. (2002)
suggested these factors are less important than the role of headquarters
as the provider of tangible resources. The discussion about the actual
influence of the relationship with headquarters as a factor in the es-
tablishment of a CoE concerns with, a great extent, the problem of
balancing a subsidiary's autonomy (Ensign et al., 2000; Vives, Asakawa,
& Svejenova, 2010).
The internal relationships of a CoE with other subsidiaries or busi-
ness units of the MNE are proven to act as a source of intangible
knowledge flows (Frost et al., 2002; Vives et al., 2010) and competence
(Ensign et al., 2000). They also stimulate “the emergence of advanced
capabilities in the subsidiary” (Frost et al., 2002, p. 1002) and con-
tribute toward the establishment and ongoing activities of a CoE.
Each subsidiary is embedded in its local business environment and
has its own external relationships with customers, suppliers, dis-
tributors, and governmental bodies (Asmusen et al., 2009; Ensign et al.,
2000; Ghoshal & Bartlett, 1990), which can strongly influence the
transformation of a subsidiary into a CoE. Concerning the local en-
vironment, operating in a particular location influences the evolution
and organization of a subsidiary's roles (Bartlett & Ghoshal, 1986) and
creates a platform to acquire knowledge and exploit the scope for in-
novation provided by that location (Ensign et al., 2000; Holm et al.,
2005; Vives et al., 2010). Furthermore, external relationships,
3
Journal of Business Research 100 (2019) 1–15
especially highly adapted relationships, provide the requisite resources
to a subsidiary and develop its competencies. Holm et al. (2005)
pointed out that these relationships explain differences in the compe-
tence level among subsidiaries and indicate which subsidiaries will
contribute to competence development in the whole MNE and thus
emerge as a CoE. Additionally, subsidiary-specific advantages are said
to at least partly originate from external relationships and networks
(Rugman & Verbeke, 2001). These external relationships give access to
important information and knowledge (Andersson & Forsgren, 2000;
Holm et al., 2005) and influence the level of a subsidiary's innova-
tiveness (Frost et al., 2002). External relationships may also help a
subsidiary influence its internal relationships and the MNE's strategy
and future behavior, and thereby enhance its importance for the entire
MNE (Andersson & Forsgren, 2000).
External relationships that are important for the emergence of a CoE
develop over a longer period and are characterized by relation-specific
investments and mutual adaptation in terms of products, technology,
and administrative systems (Andersson & Forsgren, 2000). Andersson
and Forsgren (2000) indicate that the more adapted the subsidiary is to
external actors, the higher will be its influence and importance within
the MNE, at least with respect to technology, and the possibility that the
subsidiary will function as a CoE. Therefore, the establishment of a CoE
and the degree to which a business unit can play this role and be im-
portant for the entire MNE depend on the position that the CoE assumes
in the internal and external networks, a theme that we will discuss in
the next Section 2.3.
2.3. The network position of centers of excellence
While, in the strategic management literature, the notion of position
refers to a specific dimension of superiority over rivals or a spot to be
defended on a strategic map (e.g., Mintzberg, 1987; Porter, 1996; Teece
& Pisano, 1994), the IMP approach employs a more multidimensional
concept of “network position” (Gadde, Huemer, & Håkansson, 2003;
Håkansson & Ford, 2002; Johanson & Mattsson, 1992). Rather than
focusing on positioning “against” rivals, this concept focuses on posi-
tioning “in relation to” any other counterpart in the industrial network
(Baraldi, Brennan, Harrison, Tunisini, & Zolkiewski, 2007).
Precisely, this network position is defined vis á vis direct and in-
direct counterparts, ranging from customers to suppliers and third
parties with whom the focal firm has only indirect relationships
(Håkansson & Snehota, 1995). Similar to the notion of “centrality”
within social network analysis (Borgatti, 2005; Freeman, 1978), IMP's
network position is a structural concept (Anderson, Havila, Andersen, &
Halinen, 1998) resulting from the number of direct and indirect re-
lationships held by an organization. However, when compared to
classical measures of centrality, IMP's network position depends heavily
on the very nature, quality, and heterogeneous content of these re-
lationships. Particularly, IMP's network position is a multidimensional
concept because it is framed by the three layers of the actors-resources-
activities (ARA) model (Håkansson & Snehota, 1995), that is, the actors,
resources, and activities that are connected across each business re-
lationship (Ford, Gadde, Håkansson, & Snehota, 2011, p. 49). There-
fore, a central network position can be based only on one (e.g., con-
trolling resources that are significant for other network actors), two, or
all three layers. The network position of a firm depends on the overall
network structure, the number, type, and content of its relationships
and how these are connected along the three layers of the ARA model
(Håkansson & Snehota, 1995).
The other actors in the network, their perception, and reactions are
particularly important in defining a firm's network position (Gadde
et al., 2003) because it “requires the acknowledgement and accep-
tance…by other actors in the network” (Håkansson & Snehota, 1995, p.
220). Acquiring a more central position “cannot be done unilaterally
without having the support of at least some other actors in the network”
(Håkansson & Snehota, 1995, p. 226). Accordingly, understanding how
E. Baraldi and M. Ratajczak-Mrozek
network positions change is a key issue—while some authors stress that
actors' positions constantly change in a network (Anderson et al., 1998),
others propose that major changes in an actor's position can only be
achieved in the long-run (Håkansson & Ford, 2002). Firms deliberately
try to change their network position by, for instance, replicating certain
activities and resources in particular sections of the network (Mota, de
Castro, & Brito, 2016); additionally, they seek favorable positions, such
as gatekeepers, which would allow them to exert power and exercise
control over other actors in a network (Olsen, Prenkert, Hoholm, &
Harrison, 2014). However, the network position of the firm is subject to
change, regardless of its own initiatives (Håkansson & Snehota, 1995),
and its relational nature is also shaped by its business partners to a
certain extent (Gadde et al., 2003).
2.4. Micro and macro positions in industrial networks
Deliberate or emergent changes in the network position of an or-
ganization depend on changes in interactions at two levels: (1) the
dyadic level of a direct relationship with a particular counterpart and
(2) the network level embracing several connected relationships, in-
cluding indirectly related counterparts (Håkansson & Snehota, 1995).
These two levels correspond to the distinction between “micro posi-
tion,” defined vis-á-vis a particular counterpart, and “macro position,”
defined in relation to the totality of counterparts in a network
(Håkansson & Snehota, 1989; Johanson & Mattsson, 1985). Concerning
the dyadic level, changes in this “micro position” are driven by factors
that characterize the focal relationship, in terms of activated resources,
such as the level of exchanged volumes, adaptations in interorganizational
routines (Baraldi, 2008), which, in turn, impact the degree of mutual
dependence between the parties (Baraldi, Proença, Proença, & de Castro,
2014; Håkansson & Ford, 2002), and actor-related dimensions, such as
the level of trust and commitment between the parties and their identities
(Håkansson & Snehota, 1995). Considering these driving factors, the
micro position of a supplier vis á vis a customer can be assessed in terms
of strength and be operationalized, for instance, as “strong” or “weak.”
Specifically, the micro position of the focal unit can be improved/
strengthened by an increase in exchange volumes, closer inter-
organizational routines, increased customer dependence, trust and
commitment, and a clear and positive identity (e.g., “key supplier”)
assumed by the supplier in the “eyes of the customer” (Håkansson &
Snehota, 1995, p. 198).
At the network level, changes in the “macro position” of an orga-
nization can be assessed in terms of centrality and expressed as the
organization assumes a more central or peripheral position. These
changes in the macro position occur as a consequence of changes in the
same driving factors as those for the micro position (volumes, inter-
organizational routines, dependence, trust and commitment, and identities),
but they must be assessed over several direct and indirect relationships
involving the focal organizations, as well as the connections between
these relationships (Håkansson & Snehota, 1995). For instance, the
macro position of a firm would assume a more central position if the
volumes of exchange in the network that it directly or indirectly con-
trols (or is responsible for) increase, if its routines become a crucial part
of the network-level routines connecting several firms, if several actors
heavily rely on this position while trusting and committing to it, and if
its identity as, for instance, an “orchestrator” or indispensable player
gains acceptance across the entire network.
These factors that drive the network position of a firm at dyadic and
network levels are also related to developments at a third level, namely,
the organization level (Håkansson & Snehota, 1995); in this context, it
must be noted that internal resources, competencies, and organizational
structure (Baraldi, 2008) are important as they enable and constrain the
focal organization in its interactions with specific counterparts and the
entire network and hence in the micro and macro positions that it can
assume. However, at the same time, the external interactions of a firm
importantly contribute to forming the firm's internal resources,
4
Journal of Business Research 100 (2019) 1–15
competencies, and organizational structure (Håkansson & Ford, 2002).
Hence, the connections between the driving factors operating at the
three levels (firm, dyad, and network) and the resulting network posi-
tion are complex and highly dynamic.
An organization's network position reflects its “capacity to provide
values to others (productiveness, innovativeness, and competence). It is
also a determinant of the possibilities of developing its capability by
drawing on the capacity of others” (Håkansson & Snehota, 1995, p. 48).
Since value creation and capability or competence development are key
aspects also for CoE within MNEs, the network position of these busi-
ness units is essential for fulfilling their role as a CoE. Particularly, it is
relevant to consider the “entire” network that embeds the subsidiary,
connecting it to counterparts both inside and outside the MNE, irre-
spective of where counterparts are located, since subsidiaries can in-
clude important relationships with customers or suppliers located in
any country. Changes, deliberate as well as emergent, in the network
position of a subsidiary can contribute toward its transformation, even
unexpectedly, into a CoE and, with time, can continue to impact, both
positively and negatively, its degree of importance for the MNE and the
intensity of its role as a CoE.
3. Method
3.1. Method description
We base our analysis on a single case study design. Precisely, we
construct a longitudinal (Leonard-Barton, 1990; Pettigrew, 1997) case
study covering the period between 1986 and 2014. We analyze how a
supplier of IKEA, comprising three Polish factories located in the
Poznan area (now IKEA Industry Zbąszynek, IIZ, formerly Swedwood
West), progressively became a CoE belonging to IKEA's production firm
IKEA Industry, and how it improved this role as a CoE and its im-
portance for this MNE in the future. Due to the large time span ana-
lyzed, the study was conducted retrospectively, even though, during the
period 2001–2003 and later in 2014, it was possible to follow the events
as they were unfolding, that is, as a real-time study (Halinen &
Törnroos, 2005). Moreover, when following events in real time, retro-
spective questions about how current structures and occurrences re-
lated to previous ones were constantly asked. This longitudinal ap-
proach is especially justified because if the internationalization process
and change are analyzed in the context of one single MNE, then “the
analyst can hold ‘the form’ constant while varying the context—the
same firm across time or geographically separate parts of the same firm
at the same time” (Buckley, 2014, p. 240).
The analyzed case should be considered as an exceptional case (Yin,
2009) because the establishment of a CoE, as a result of the interactions
involving IKEA and other firms, remarkably departs from the typical
process of a CoE's creation within an MNE. This situation provides a
unique opportunity of using a single case study method to uncover new
facets of the phenomenon of CoEs. The case also offers an opportunity
to elaborate on the key factors that drive the changes in a focal orga-
nization's network position and in its importance and role intensity as a
CoE.
Single case studies are known to have external validity problems
because of sample bias (Bryman, 2001). However, single case studies
are necessary to explore a phenomenon when knowledge about it is
limited (Doz, 2011; Eisenhardt, 1989; Jonsson & Foss, 2011; Welch &
Paavilainen-Mäntymäki, 2014). A single case study also provides a rich
description of the context in which events occur (Dyer & Wilkins,
1991), and understanding the context is pivotal for connecting the es-
tablishment of a CoE with the notion of network position and its
changes over time (Easton, 1995).
3.2. Data collection
Data were collected in Poland and Sweden mainly during two
E. Baraldi and M. Ratajczak-Mrozek Journal of Business Research 100 (2019) 1–15

phases, first in 2001–2003, and subsequently in 2014, complemented identifying the connections between the events and historical process
by a pivotal interview in 2007 (see Appendix A). The time lapse be- for the period in focus, 1986–2014.
tween the two main data collection phases enabled capturing the his- Multiple interviews and sources facilitated rich data collection on
torical and long-term natures of the process of the establishment of the the different contexts, structures, and processes; they also contributed
CoE as well as the changes in its network position. Particularly, in 2007, toward data triangulation.
the interview with an IKEA purchase manager covered the structural
changes taking place at that time in IKEA's suppliers' network and their
3.3. Data analysis
impact on the focal unit. This interview also facilitated the verification
of the trends already identified in the data from 2001 to 2003. Likewise,
The data were utilized to define the network position of the focal
the interviews from 2014 verified the trajectories that emerged in 2007
business unit, which was operationalized into micro and macro posi-
and retrospectively traced in detail the main events that occurred since
tions (Håkansson & Snehota, 1989; Johanson & Mattsson, 1985). As
earlier data collection episodes, in particular, the changes that resulted
analyzing all micro positions of the focal unit vis á vis many other or-
into new structures and positions for the focal unit. Additionally, both
ganizations would be highly cumbersome over the long timeframe of
rounds of interviews covered the historical events starting from 1986 as
our study, we chose to focus on its micro position only in one pivotal
some respondents were involved in the focal unit's operations almost
relationship and on its macro position in a broader network whose
since its beginning. Thus, each subsequent data collection episode en-
boundaries are discussed below. The micro position focused on the
abled us to trace and verify the development processes that occurred
focal unit's position vis á vis IOS (IKEA's headquarters) and was assessed
after the previous ones.
in terms of strength (weak or strong), while the macro position vis á vis
A total of 46 interviews were conducted—37, 1, and 8 in
the entire intra- and interorganizational networks of the focal unit was
2001–2003, 2007, and 2014, respectively—with 28 representatives of
assessed in terms of centrality, as peripheral or central (see Table 3 in
different units within IKEA, the focal business unit (Swedwood West,
the Section 5).
renamed later into IIZ), and three key external suppliers (see Appendix
Our data analysis, comprising mostly informant narratives (Boje,
A for details). After obtaining permission for interviews from re-
2001; Makkonen, Aarikka-Stenroos, & Olkkonen, 2012), began by or-
sponsible managers both at IKEA's headquarters in Sweden and at the
ganizing the events described in a chronological order. In parallel, we
Polish unit, other key respondents were identified by referrals of pre-
extracted the relevant network structures at different points in time as
vious interviewees using a snowballing approach (Patton, 2002). All
well as their changes from the narratives and other data sources (see
but four interviews were conducted face-to-face, and lasted between 30
Table 1). Since changes in the network position of the focal business
and 180 min. A total of 34 interviews were recorded and transcribed,
unit entailed changes along several dimensions (activities, actors, and
while for the remaining 12 interviews, detailed notes were taken during
resources) and for several organizations, we did not extract single
the interview.
“critical events” (Tidström & Hagberg-Andersson, 2012) from our em-
The respondents were interviewed about key activities, resources,
pirical materials. Instead, we identified each change in the network
and competencies of the focal business unit, and of other selected units.
position as resulting from the cumulative effect of a series of events
They were also asked about the content and nature of key relation-
over time, each one impinging on one or more network layers (activ-
ships—the relationship of IIZ with (1) IKEA of Sweden (IOS) (which we
ities, resources, and actors) or on one or more specific organizations. In
consider as the MNE's headquarters due to its prominent role in forming
our data analysis, we clustered these events into periods of time of
IKEA's strategy, despite a few other units acting more as financial
varying lengths, each one characterized by a similar network position;
headquarters), (2) with other units of the MNE, and (3) with key sup-
this means that the end of a period and the start of a new one indicates
pliers. Particularly, we asked how the content of these relationships has
that we observed a clear change in the focal unit's network position,
changed over time in relation to important events, especially between
even if it should be considered an analytical simplification since
2003 and 2014, that is, our two main data collection points. In 2014,
changes in network position occur continuously (Henders, 1992).
we also asked the respondents to describe the key events (e.g., the
Particularly, we operationalized changes in the micro position of the
opening of a new product development center) and changes in the focal
focal business unit in terms of transitions from a weaker to a stronger
unit competencies and the surrounding network; these changes have
key business relationship with IOS (indicated by factors such as in-
been witnessed since 2003.
creased volumes, adaptations, specific investments, or higher mutual
Additionally, when visiting the Polish subsidiary, direct observa-
dependence); additionally, changes in its macro position were oper-
tions of the production and organization processes were conducted.
ationalized in terms of transitions from a peripheral to a more central
Moreover, secondary sources, including organization websites, organi-
position (indicated by factors such as deepened relationships with ex-
zation reports, internal brochures, newsletters, and articles about IKEA
ternal suppliers, a more prominent role as broker, acquisition of re-
Industry were used (see Table 1). These data further contributed to
sources essential for the network, or the delegation of key tasks from

Table 1
Sources used for data analysis.
Type of data Period Role in the research process

Interviews 2001–2003; 2007; 2014 Identification of key resources and activities and their interorganizational connections.
Understanding actors' perceptions of counterparts. Identifying historical events
(1986–2001).
Direct observations 2002; 2003; 2014 Understanding competencies in action, technical adaptations, connections, and volumes
involved.
Organization websites 2001–2002; 2007–2008; Basic information about involved organizations.
2014–2016
Organization reports and documents (e.g., IT- 2001–2003; 2014 Understanding organization's development, strategic choices, and intra- and
generated order books and delivery sheets) interorganizational routines. Assessment of volumes of production and transactions.
Internal brochures and newsletters 2001–2003; 2007–2008; Understanding organization's values and organizational culture.
2014
Articles about IKEA Industry 2006–2016 Mapping important events in the development of the subsidiary and the MNE; insights about
external opinions about a subsidiary.

5
E. Baraldi and M. Ratajczak-Mrozek Journal of Business Research 100 (2019) 1–15

the headquarters) in the broader network (see the rows in Table 3 in the
Section 5). Precisely, since industrial networks have no clear or pre-
defined boundaries (Håkansson & Snehota, 1995), for our analytical
purposes, we considered the “broader” network resulting from the
following three sets of relationships: (1) the relationships of the focal
unit with its own suppliers, (2) the main relationships of IOS (both
internal and external relationships), and (3) the relationships of units
inside IKEA Industry/Swedwood (which also include the focal unit). We
observe changes associated with the (macro) position of the focal unit
inside the structure resulting from the combination of the three net-
works. These analytical delimitations and the operationalization of
micro and macro positions above enable us to apply concretely the
otherwise abstract concept of network position, which we consider as a
relevant methodological contribution.
The observed changes in the degree of importance and the value of
the analyzed CoE for the MNE were visible in the change in the in-
tensity of its role, in the scope and differentiation of competencies and/
or knowledge used, and in the different levels of responsibility and
autonomy acquired over time by this unit. Subsequently, we interpreted
this ordered and structured data to link the Polish unit's emergence and
subsequent improvement as one of IKEA's CoE with its changing net-
work position.
The case study was built following an abductive logic of systematic
combining (Dubois & Gadde, 2002), implying that we switched be-
tween the IMP and MNE theories, on one hand, and the empirical data,
on the other hand. When preliminarily analyzed, the empirical data
stimulated the use of new theoretical concepts, which, in turn, led to
new data collection or considering different views when analyzing the
available data. Particularly, the early data collection (2001−2003)
relied exclusively on IMP concepts, while MNE theory was introduced
as a guide for data collection and a new interpretation lens only in
2014, when it became clear that this was a unique case of CoE. At this
point, in our analytical work, network position appeared as a relevant
concept to understand the emergence of the CoE. Therefore, new data
were collected explicitly to re-analyze older data for assessing this
network position.
Therefore, even if this study contributes an empirical application of
network position, the conceptual framing and operationalization of this
notion proceeds in tandem with the data collection and analysis. Thus,
reflecting our abductive approach, the theoretical background of
Section 2 is more a result of this study rather than a pre-existing fra-
mework, and we, accordingly, chose to provide only an indication of
the key drivers of a network position in Section 2.4, which are the main
results of this study and are presented in more detail in our discussion
(Section 5). These drivers were generated from the case by matching
the respondents' view on important factors (e.g., see the quotes in
Table 2) with our empirically grounded interpretation of the underlying
reasons and, subsequently, with more abstract theoretical concepts
describing the network position at dyadic and network levels. In this
way, we moved from five general, respondent-near factors (see Table 2)
to eight theoretically related drivers (see Fig. 2), which, for instance,
elaborately specify a single broad factor (e.g., the general “external
relationships” are specified by five specific drivers).
The analysis in the case study is presented from the perspective of a
focal business unit formed by three Polish factories located in the
Poznań area, which were independent suppliers to IKEA until 1992,
when they became a part of IKEA's production arm (then known as
Swedwood) under the name of Swedwood West, and which were
transformed into IIZ in 2014.
4. From supplier to center of excellence and beyond: the case of
IKEA Industry Zbąszynek
4.1. Becoming a key supplier of IKEA
In the 1980s, when IKEA was looking for new producers, it came to
the cooperative Zbąszyń-Babimost located near Poznan, Poland. At that
time, the cooperative produced sink cabinets using a technology known
as the “Board on Frame” (BOF). IKEA was looking for producers that
used this technology as it could create lightweight furniture and reduce
transportation costs; these became the key features of the LACK table
that was launched by IKEA at that time. Therefore, the Polish co-
operative had a technology that IKEA needed, despite the fact that, at
that time, the production volume and quality of their sink cabinets
featuring the BOF technology were limited. Still, IOS, IKEA's strategic
unit, acting as operations headquarters and overseeing product devel-
opment and strategic purchasing, decided to assign the first large pro-
duction order to the cooperative in 1986. This decision was also based
on the competitive prices the cooperative could offer, owing to the low
level of Polish salaries and its location near Germany, IKEA's main
market, which further contained transportation costs. Satisfied by the
cooperative's delivery performance, IKEA soon increased its orders of
LACK tables and other models, such as shelves, built using BOF, to these
Polish factories.
In the 1990s, Poland underwent an economic and political transi-
tion, and suddenly the cooperative started to generate debts. Therefore,
upon receiving an explicit proposal from IKEA, in 1992, the co-
operative's general assembly agreed to allow Swedwood, the production

Table 2
Important factors for transforming into a center of excellence.
Factor Descriptive quotes

People, knowledge, experience and local legacy, and
traditions
Geographical location
Internal subsidiary infrastructure
External relationships–supplier base
IKEA's culture and flat organizational structure
“In the case of development, this is mainly thanks to the Polish people. They are ambitious, productive, laborious, and
have an uncomplaining attitude. Our technology is not simple. For example, it cannot be based on instructions like ‘turn it
on using the green one and turn it off using the red one.’ Here you must use knowledge and skills. Linking the Swedish
culture with our own also contributed to this firm's success.” (R27)
“The history of the factory continues to be very important. Here, we have third and even fourth generation of employees
from the same families. … As we are a factory with a history, there continues to be a mixture of routine and youth here.”
(R26)
“Geographic location has an impact. Our location is on the western wall, near the German market where we are
dependent on suppliers of German machinery. This gives us a definite advantage. Some of our suppliers are from Italy.
The level of travel costs is different.” (R24)
“Our location in central Europe provides us distinct advantages. We must be competitive, even between our own factories.
In our discussions with IKEA, we show that we have the best logistical location because we are in the center.” (R25)
“Besides these resources, we have our production set up, including machines, equipment, and the whole infrastructure.”
(R24)
“We have the advantage that we are fully secured by suppliers as we have them ‘to hand’—European suppliers or very
good local ones that have already learned. We cannot manage alone, and hence we must depend on suppliers, support,
and collaboration with local authorities, among others.” (R24)
“The flat structure means that there are no barriers and inhibitions to talk to someone about the problem or idea. If Ingvar
Kamprad [IKEA's founder] came here, I could approach Him.” (R24)

6
E. Baraldi and M. Ratajczak-Mrozek
arm of the IKEA Group, take over the cooperative. In 1992, this new
business unit of Swedwood included two factories in the neighboring
towns of Zbąszyń and Babimost and were renamed Swedwood West.
Initially, IOS considered this unit as an inexpensive and efficient
manufacturer. Even though Swedwood and IKEA had the same owner,
IKEA and Swedwood West had a buyer and external supplier relation-
ship; accordingly, IKEA had Swedwood West compete with other sup-
pliers for winning production assignments and had the rights to ter-
minate the contract on the grounds of disagreeable quality or prices.
However, the relationship between the former cooperative and
IKEA, specifically, IOS, strengthened owing to the former's being part of
Swedwood. Swedwood West and IOS started collaborating intensively
in the 1990s, owing to several joint projects aimed at developing the
process technologies behind BOF. In fact, IKEA realized that Swedwood
West was not only an inexpensive manufacturer, but it could also sig-
nificantly contribute to innovating BOF production processes for con-
taining product costs. IKEA's production orders to Swedwood West in-
creased consistently, and this unit became responsible for the global
production volume of LACK tables, which accounted for over 2 million
tables.
Thus, IKEA not only relied on Swedwood West for the deliveries to
all its retail stores of one of its key products, namely the LACK table, but
also motivated Swedwood West to take the responsibility of further
developing some of IKEA's key technologies such as BOF. The ability to
consistently reduce production costs, owing to the unit's own techno-
logical development and low Polish salaries, became a fundamental
asset for Swedwood West. As per a respondent, “The constant focus of the
units to improve technologies and their contacts with local engineering firms
with a good history of technical collaboration made these Polish factories so
attractive for IKEA, not only the low cost” (Respondent R5).
4.2. Becoming a technology leader and CoE within the IKEA Group
The mutual dependence between IKEA and Swedwood West grew
further in the 1990s, with several new products being assigned to the
Polish factories, especially BOF-based products. In order to manage the
increase in order volumes, Swedwood West had to increase its pro-
duction capacity, which led to the establishment of a new factory in the
neighboring village of Zbąszynek in 1999. Moreover, the factories took
a leading role in further developing key products, such as the LACK
table, through several technology development projects. For instance,
in the early 1990s, these units introduced, in collaboration with a
nearby external supplier, a revolutionizing technology for building
empty legs for tables, which are produced till date only in the focal
business unit. As per a respondent, “At IOS, we were trying to eliminate
solid-wood legs, which are expensive and heavy to transport. Babimost come
up with this unique machine so new it did not have even a name. It was
considered a very creative solution” (R1).
Further, relying on close collaborations with machine suppliers and
global coating technologies supplier (whose experts worked at
Swedwood West full-time for several months), in the early 2000s, the
Polish unit also perfected and introduced a new surface treatment
method that facilitated printing a veneered pattern on particle boards.
As pointed by a manager from a major coating supplier, “This ‘printed
veneer’ project was quite advanced … For almost two years, we ran several
tests with LACK tables on the Polish factories' floor. I and my colleagues
spent several months in those factories. Finally, in 2002, the solution was
ready, and we all were quite happy with the technical results, but IKEA
decided not to launch it on the LACK table” (R21). IKEA's global pur-
chasing organization had identified extremely convenient and high-
quality veneers, which it requested Swedwood West to use for the LACK
table instead of the newly developed print-on-wood technology.
However, IOS “realized that Swedwood West had invested considerable
efforts into the new technology, and hence IOS decided to apply it im-
mediately on other items with less risk of wearing, like bookshelves produced
in the Polish factories,” in the words of a respondent (R1). Moreover, in
7
Journal of Business Research 100 (2019) 1–15
2006, Swedwood West could eventually apply the print-on-wood
technology on the LACK table, its original target, and, most im-
portantly, it was later applied to several of IKEA's products in other
manufacturing units.
As of 2003, Swedwood West was not only playing a key role in
production and technology development among IKEA's suppliers, but
was also handling some highly complex and demanding order and de-
livery routines for IKEA, which, at that time, were restricted to about
20% of IKEA's suppliers. However, in order to achieve these targets, in
2000–2003, Swedwood West had to make massive investments in new
warehousing facilities in Zbąszynek and expand the team of order
managers, who trained in close interaction with IKEA's logistics units
for several months to learn the new routines. Particularly, it was dif-
ficult to introduce new and sophisticated IT connections with IKEA and,
especially, to implement a state-of-the art ERP (enterprise resource
planning) system as the latter required changing the production plan-
ning and the workflow in Swedwood West's factories.
After this period of intense and demanding adaptations to IKEA's
routines, the Polish unit became even more connected to IKEA's net-
work and was equipped to start introducing even the most advanced
order management and delivery routines, which, at that time, was re-
stricted to only 1% of IKEA's suppliers; these logistics systems were
equipped to forecast IKEA's demand and accordingly replenish in-
ventories. Unsurprisingly, Swedwood West remained a key supplier
during the massive reduction of IKEA's supply base from over 2.500 to
1.300 direct suppliers, which IKEA implemented in 2002–2007 in order
to “focus on fewer, highly competent partners that had the ability to manage
several sub-suppliers” (R22). Indeed, after this reduction, Swedwood
West witnessed an expansion in its responsibilities, both in terms of
increased production volumes and technology development. New pro-
duct lines were allocated to Swedwood West and this production in-
crease led to the establishment of new factories in Zbąszynek in 2005
(for new lines of products) and in Babimost in 2008 (for components).
An important milestone in the relationship between IOS and
Swedwood West was witnessed in 2008 when the organizations colla-
boratively decided to create a product development center (PDC) in
Zbąszyń. Since its establishment and till date, PDC focuses on the de-
velopment and implementation of new technologies as well as new
products for IKEA. The PDC is directly responsible for contacts and
collaborating with the factories of Swedwood West, IOS, and other
subsidiaries of IKEA. With the creation of PDC, these factories served as
“testing grounds” within the entire IKEA. Today, many new technolo-
gies are tested in these factories before being implemented across the
MNE. As stated by a respondent, “As we are an experimental factory lo-
cated close to the PDC, we are often asked to carry out preliminary testing.
Even if we know that a product is, for example, dedicated for final pro-
duction in Portugal. Later, this knowledge is transferred onwards” (R26).
The creation of a PDC in factory-like conditions emerged from the
need to adapt new solutions to production scale, especially for mass
production. Particularly, there has always been a need to adapt new
solutions (e.g., designs) to the capabilities of the machinery infra-
structure and materials. Additionally, when new solutions are devel-
oped, there is also a need to engage with the supplier base for materials
and machinery that was established since the 1990s. In the words of an
employee of the Polish unit, “A supplier and partner must know our
reality, know what we expect, and when we expect, among knowing our
other requisites” (R26). Acting de facto as a CoE (even without being
officially named as such by IKEA) means, for the focal unit, conceiving
new technologies and ideas and adapting new solutions to the capacity
of its own machine park. Moreover, as added by another respondent,
“When it comes to new technology, we can, together with our partners, build
a new machine prototype which does not exist anywhere in the world”
(R24).
Owing to the need to generate sustainable advantages in the form of
lower prices, better service, and higher quality, Swedwood West in-
creasingly relied on long-term relationships with suppliers of
E. Baraldi and M. Ratajczak-Mrozek
Fig. 1. Timeline of the developments in the case of Swedwood West/IIZ.
machinery (e.g., Sorbini, Cefla, Valtorta, and Bürkle), coating, and
process materials. The long-term cooperation with selected suppliers
facilitated the joint development of new technologies, as shown by the
examples above concerning the BOF technology and the LACK table.
Coating technology suppliers, such as Becker-Acroma and Akzo-Nobel,
were particularly important for technical development, and despite
them being larger than Swedwood West, they considered it as a very
important pilot customer and even a bridge to reach IKEA's broader
supply network with much larger volumes. As expressed by coating
equipment supplier R18, “For us it is fundamental to get our [coating]
machines installed at Swedwood West as it is an entry port to IKEA”.
However, since Swedwood West consumed high volumes of some ma-
terials, such as high-density fiberboard, it represented a major customer
for the suppliers like Kronopol and eventually started obtaining special
conditions and adaptations from the early 2000s. Another important
group of suppliers comprised large logistics partners such as TNT; al-
though these relationships were also framed according to IKEA's global
agreements, Swedwood West managed them directly since the in-
troduction of the new logistic routines.
4.3. Supporting the development of other units in the IKEA Group
Parallel to the establishment of the PDC, Swedwood West became
indeed a CoE, being capable of developing several technologies that
were leveraged by other subsidiaries at that time. However, Swedwood
West's development and its recognition as an “excellent” unit within the
MNE did not stop at this point. The degree and scope of competencies
used by other subsidiaries and the parent firm has been increasing since
the early 2010s. Swedwood West has been responsible for transferring
not only technical but also organizational knowledge and competencies
to other units within the rest of Swedwood, which was later reorganized
into “IKEA Industry”. These competencies of Swedwood West were used
by IKEA when opening new factories around the world; this unit con-
tributed to IKEA's internationalization process and the launch of new
factories by providing people, knowledge, and experience and by
transferring elements of machinery and product components.
The main reason behind the involvement of Swedwood West in the
development of IKEA's other foreign manufacturing subsidiaries was
the need for standardization of manufacturing solutions. From the early
2010s, Swedwood planned and devised new factories based on the
production experience of Swedwood West, thereby saving time, costs,
and reducing risk. The experience gained in Zbąszyn, Zbąszynek, and
8
Journal of Business Research 100 (2019) 1–15
Babimost was first used in Portugal, followed by the United States and
China. In China, the factory was built in 2013 from scratch. During this
time, Swedwood West was successfully implementing the technology
needed in China; the head of one of the Polish factories was chosen to
be the project leader of the factory established there. The aim was not
only to plan and build a new factory, but also to teach Chinese em-
ployees how to implement and utilize the technology and operate the
machinery. Following the launch of the factory in China, the Director of
Swedwood West took responsibility of the unit IKEA Industry Nantong,
China. This means that, from the perspective of Swedwood West, “The
factory in China was not different from Babimost and it was essential to help
and support them” (R24). However, this support to the Chinese unit does
not operate on a formal level through financing or investment, but takes
place through organizational support.
To confirm the importance and value of Swedwood West in IKEA's
structure, the three Polish factories were formally integrated with the
IKEA Group in 2014. The decision was made by IKEA's headquarters
and did not concern only Swedwood West. The entire Swedwood (and
the process materials division Swedspan) were integrated under “IKEA
Industry” and officially entered the IKEA Group, after having been
formally outside it for nearly 30 years. Precisely, Swedwood West (the
factories and warehouses located in Zbąszynek, Babimost, and Zbąszyn)
now formally makes up the business unit IIZ and belongs to IKEA
Industry's Flatline Division. When Swedwood West became IIZ in 2014,
it represented a real merger with the IKEA Group. This, in turn, “means
that IKEA has recognized that the level of these factories is such that we can
stick the IKEA brand on the wall,” a respondent quoted (R24). Fig. 1
below summarizes the main developments and events involving
Swedwood West/IIZ between 1986 and 2014.
When explaining the events described above, in 2014, the managers
of IIZ presented the following reasons why this unit became de facto a
CoE within IKEA Industry: the knowledge and experience of its em-
ployees, rooted in local traditions; a favorable geographical location
near main markets; good relationships with (sub-)suppliers of equip-
ment and materials; the internal infrastructure of the business unit; and
the receptiveness of IKEA's culture and organizational structure (see the
list of factors and descriptive quotes in Table 2). While the first two
reasons are clearly place-related and would equally characterize any
actor located in that geographic area, the others are more specific to IIZ
and its interactions with IOS and the internal and external MNE's net-
work, including relationships with important sub-suppliers located in
other countries.
E. Baraldi and M. Ratajczak-Mrozek Journal of Business Research 100 (2019) 1–15

5. Analysis and discussion

Very central position: building on previous position, higher

centrality/responsibilities within the entire IKEA Group

utilized to support other internal units. Continuously

In order to address our two research questions, this section analyzes

and toward sub-suppliers. Increase in competencies

integration with other IKEA Industry's units, more
Very strong position of equal partners, eventually
and discusses our case by focusing on the following three main issues:
(1) examining the changes in the network position of the focal business
unit during the period 1986–2014 and tracing how such changes con-

taking increased responsibility as a CoE

tributed to its transformation into a CoE, according to the first part of
RQ1 at the end of our Introduction; (2) focusing on the enhancement of
the degree of importance and value of the CoE, addressing the second
part of RQ1; and (3) discussing the factors driving the changed network

belonging to same group

positions of the focal unit and hence its emergence and further im-
provement as CoE, according to RQ2.

EVEN MORE
Even higher
5.1. Changed network positions: becoming a CoE and beyond

2008–2014
Concerning the first point above, a historical analysis of the devel-
opment of the focal unit—first as the Cooperative Zbąszyń-Babimost,

deploys a pivotal resource (PDC) competence center, and

followed by its acquisition and renaming as Swedwood West, and fi-

several sub-suppliers). Competencies utilized to support

IKEA supply base (increased responsibility in handling
Central position for many new products and technologies,

becomes an important supplier after the reduction of

nally its transformation into IIZ—suggests that this organization made a

Very strong position of important partners for most

journey from being just an external supplier to becoming a pivotal in-
ternal production center, followed by becoming a CoE with important
responsibilities across the entire IKEA Group and taking ever-increasing
responsibilities as a CoE. This journey was accompanied by a series of
changes in this unit's micro position (Håkansson & Snehota, 1989;

other internal units: de facto CoE

Johanson & Mattsson, 1985) vis á vis IOS, its main counterpart within
the IKEA sphere (and which we can consider as the headquarters), and

complex technical tasks

its macro position (Håkansson & Snehota, 1989; Johanson & Mattsson,
1985) within the entire IKEA-related network, which encompasses both
the internal and the external networks of relationships involving IOS
and Swedwood West/IIZ.
2003–2008

These changed network positions are presented in Table 3, which

also indicates the approximate periods during which these positions

High
YES
were held. These four periods are identified within the narrative pre-
sented in the three sections of our empirical case. The narrative con- Gaining centrality as one of the best factories
Central position only for specific products, for

siders the cumulative effects of several events (e.g., the first supply to
suppliers for complex technical projects
which it manages own network of sub-
responsibilities delegated by IOS (also

IKEA, acquisition by Swedwood/IKEA, leadership in flagship technical

projects, establishment of the PDC, or support and supervision of the
Stronger position with growing

Chinese unit), which together imply substantial changes in the micro

and macro positions of the focal business unit. The dates signing the
indirect ownership ties)

boundaries of each period are to be considered as indicative because

The network position, role intensity, and importance of Swedwood West/IIZ as a CoE.

there was no sudden transition from one position to another (e.g.,

“weak” to “stronger” in the case of the micro position or “peripheral” to
of Swedwood

“gaining centrality” for the macro position). However, the defined po-
1992–2003

Growing

sition was maintained most of the time in each of the four indicative
periods, suggesting a continuous kind of change in the network position
NO

(e.g., Henders, 1992).

Precisely, we find that the focal unit started from a weak micro
Peripheral position: one of the many
suppliers with limited connections
Weak position of new and small

position vis á vis IOS, which grew stronger in the 1990s. This also holds
with other IKEA-related actors

for the micro positions (not shown in Table 3) in relation to other single
counterparts such as local engineering firms and global coating sup-
pliers. However, it is only from 2003 that the micro position vis á vis
IOS strengthened to create the foundation for its transformation into a
CoE. However, becoming a CoE required also a substantial change in
1986–1992

the focal unit's macro position. In fact, it was not enough to move from
suppliers

Minimal

a peripheral position in 1986 to a more central position in the 1990s for

NO

certain specific products, only because of the unit's production effi-

ciency. Swedwood West could become de facto a CoE only during
Role of the center of excellence

2003–2008 by attaining centrality for a broader network, encompassing

related network, internal
Micro position (vis á vis IOS,

Degree of importance for the

Macro position (in the IKEA-

more products and technologies and, accordingly, covering a larger

portion of the network, from raw materials to IKEA's retail stores. At
operational HQ)

this point, Swedwood West's macro position improved for mainly the
and external)

following two reasons: (1) it strengthened its micro positions vis á vis
several individual partners beyond IOS (e.g., various machine suppliers;
MNE

coating suppliers, such as Akzo-Nobel and Becker-Acroma; and material

Table 3

supplier Kronopol), and (2) it emerged as an extremely crucial supplier

in IKEA's reduced supplier base, which meant that Swedwood West

9
E. Baraldi and M. Ratajczak-Mrozek
attained more centrality in IKEA's supply network. This can be attrib-
uted to the reduction in the size of IKEA's supplier base and re-
positioning of some suppliers to the periphery, who became sub-sup-
pliers.
Therefore, our case shows that assuming the role of CoE, and hence
performing its two essential complementary tasks of developing and
successfully transferring a specific competence to other sister units re-
quired the focal unit to achieve the following. First, it was important to
increase the strength (Håkansson & Ford, 2002) of its micro position vis
á vis another key strategic unit, indeed the operational headquarters, of
the MNE. Second, the focal unit was required to increase, over a certain
threshold, the centrality of its macro position in the entire internal and
external networks of the MNE—a threshold of centrality over which the
focal unit became a unique broker and gatekeeper across a broader
network (Olsen et al., 2014).
Interestingly, both the strength of micro positions and the centrality
of the macro position of the focal unit increased further over this
threshold after 2008 (see the rightmost column of Table 3), which led to
the second issue raised above concerning the enhancement of the im-
portance and role intensity of a CoE. Our case shows that becoming a
CoE does not start and end with being officially appointed as such or by
playing de facto this role (Adenfelt & Lagerström, 2008; Frost et al.,
2002). The establishment of a unit as a CoE is a part of a broader de-
velopment process that can drive the unit to play this role with even
more intensity and grow in significance for the MNE. This growth in
importance as a CoE is illustrated in the case of Swedwood West/IIZ,
wherein the subsidiary assumed a very strong micro position vis á vis
IOS and a very central macro position in the entire network.
In detail, the focal unit was informally recognized as a CoE around
2008; at this time, the PDC was established and this unit started pro-
viding technology to other subsidiaries. After this point, Swedwood
West/IIZ expanded the range of competencies in which it excelled,
proving that multiple CoEs may exist in the same business unit (Frost
et al., 2002). After 2008, the focal business unit started taking an even
more central position in IKEA's network. The unit not only continued to
play its role de facto like a CoE in supporting other sister units in the
implementation of the technologies it mastered, but it also started
taking over some core activities from IOS, namely important tasks in
product development and introduction. For example, it transferred
product-specific knowledge and organizational and production com-
petencies during the launch of new manufacturing facilities (Ratajczak-
Mrozek, 2017, p. 272). Today, for these tasks, IOS considers IIZ as “an
equal partner.” This indicates a very strong micro position in this dyad
and a balanced distribution or even sharing (Håkansson & Snehota,
1995) of responsibilities in product development with the Polish units.
Thus, the focal unit started with a focus on production, and hence
gained a peripheral position in IKEA's network, and culminated into the
orchestrator of complex projects (Baraldi, 2008). This implied that the
focal unit became able to cover the entire process from idea to im-
plementation of new technical solutions transferred to sister units, a
task requiring a very central position in a broader network, with links
both inside IKEA and to global external (sub-)suppliers of technology.
This increased network centrality of the focal unit was paralleled by an
improved and more intense role as a CoE. Importantly, the expansion of
the range of competencies and responsibilities of the focal business unit
depends not only on its internal features or the links with other IKEA
units but also on the relationships with its own external (sub-)suppliers,
who can teach or co-develop new technologies (Baraldi, 2008). This
finding is discussed in the next Section 5.2 by elaborating on the key
factors that drove the changes in the network position of the focal unit.
5.2. The drivers behind changes in network position and importance as CoE
In this section, we identify the driving factors that led the focal unit
to change its network position and improve its role and importance as a
CoE; we also indicate how each factor contributed to such changes.
10
Journal of Business Research 100 (2019) 1–15
First, we will focus on factors at the internal level of the focal business
unit and, subsequently, move to relational factors operating at the level
both of the dyad (especially the key relationship with IOS) and of the
entire network (including the internal and external networks of the
MNE).
The pivotal internal-level factors that drove the changes in the focal
unit's network position (both at micro and macro levels) are its (1)
competencies, (2) internal resources, and (3) organizational structure.
These three drivers represent the factors that lead to the establishment
of a CoE, as identified by Andersson and Forsgren (2000) and
Birkinshaw and Hood (1998). However, most importantly, the devel-
opment and change that these three elements underwent during the
30 years of our analysis drove the changes of the unit's network posi-
tion. Concerning initial competencies, IKEA started buying from the
three Polish factories in 1986 owing to their ability to produce products
based on the BOF technology. This ability forms an integral part of the
place-specific features (e.g., Baraldi, 2006) of this business unit and
represents the tradition of its employees in the production domain.
Combined with the low transportation and production costs in the form
of location-specific advantages, these competencies qualified the focal
unit to enter IKEA's network, even though it could only attain a per-
ipheral position in 1986–1992 (see Table 3). The Polish focal unit chose
to upgrade its internal resources, such as machinery and entire fac-
tories, to gain a more central network position and emerge as a com-
petent and efficient supplier during the 1990s. When the focal unit
started creating a unique machinery (e.g., for the LACK table, especially
for its legs), it acquired the competence to supervise flagship technical
projects (e.g., printing veneers) and also developed its organizational
structure, which included a PDC. This initiative enhanced the centrality
of the unit within IKEA's network. The internal competencies to launch
new factories, which Swedwood/IIZ developed during the final phase of
our study (2008–14), propelled this unit even further in the central
network position for brokering (Olsen et al., 2014) key knowledge
transfers and thereby supporting the international expansion of the
entire IKEA Industry.
The developments in the competencies, internal resources, and or-
ganizational structure of the focal business unit were sustained by other
drivers operating at the level of single dyadic relationships and of the
entire network, which also improved its network position—its micro
position (within single dyads) and macro position (across the entire
network), respectively. In addition to the three aforementioned drivers,
these relational drivers operate at the single relationship (dyad) and
network levels and include (4) exchange volumes (Håkansson & Snehota,
1995), (5) interorganizational routines (Baraldi, 2008), (6) mutual de-
pendence (Håkansson & Ford, 2002), (7) trust and commitment
(Håkansson & Snehota, 1995), and (8) identities (Anderson et al., 1998).
We will discuss the impact of these five drivers on micro positions (both
toward IOS and other key partners) and, subsequently, focus on their
impact on Swedwood West's/IIZ macro position at the network level.
Looking at the dyadic level, the exchanged volumes (4) (production
size and number of new products) increased between 1986 and 2014
not only in the pivotal relationship of the Polish factories with IOS, but
also in other single relationships with their own key (sub-) suppliers of
machinery and materials, and with logistics partners. The inter-
organizational routines (5), especially in the dyad between Swedwood
West and IOS, became more sophisticated and closely connected.
Particularly, the joint processes for order management and delivery
became more complex, with Swedwood West investing more internal
resources, such as personnel and equipment, to match the specific re-
quirements of IOS. Consequently, IOS increased Swedwood West's tasks
and responsibilities pertaining to these activities. Subsequently, IOS
included Swedwood West in critical routines like product development,
which was increasingly adapted to Swedwood West's key resources,
such as the PDC, which was established in 2008. Overall, the involve-
ment of Swedwood West in all these interorganizational routines with
IKEA entailed important adaptations in the activities performed by the
E. Baraldi and M. Ratajczak-Mrozek
various units, which deepened activity links (Håkansson & Snehota,
1995).
It is interesting to notice how various drivers together reinforce each
other. Particularly, stronger interorganizational routines and increased
volumes, together with increased control over key resources, such as
technology know-how, unique machinery (from 2003), and the PDC
(from 2008), made single direct counterparts (e.g., IOS or coating
suppliers) more dependent (6) on the Polish units with time, and hence
strengthened the micro position of the focal unit vis á vis each of these
counterparts. For instance, it became difficult in the early 2000s for IOS
to replace Swedwood West as a supplier, something that would be al-
most impossible in 2014.
Over the years, the focal unit gained the trust (7) of the most im-
portant single counterparts (IOS, selected external suppliers, and other
subsidiaries in the MNE). Additionally, the unit was delegated in-
creasingly complex tasks for which it took full responsibility—it started
with simpler production assignments (1986–92), followed by more
complex ones (1992–2003), with additional responsibilities for product
development (2003–8) and technology leadership and transfer
(2003–14). Each of these counterparts have also chosen to commit more
and more resources to this unit. It started with it receiving support for
local factory refurbishing in the 1990s; this was followed by support
from technology suppliers who placed their specialists full-time at the
Polish factories. Additionally, the PDC was established in 2008 in col-
laboration with IOS. This support was also extended when the unit was
tasked with the responsibility to supervise an entire factory in China in
2014. The increased trust and commitment within these single re-
lationships strengthened the micro position of the focal unit vis á vis its
single counterparts. A similar effect on Swedwood West/IIZ's micro
position was seen when it acquired a clearer and more attractive identity
(8) along the following steps: from a low-cost to efficient producer for
IOS, from collaborator in product development to technology project
manager for single partners, and finally a technology leader, such as for
its sister unit in China.
At the network level, the same five drivers as in the dyadic level
operated for improving the centrality of the macro position of the focal
unit. The Polish factories have progressively increased their responsi-
bility and influence over the volumes exchanged (4) across the entire
network—not only the volumes they directly produced but also for
those produced by other units via, for instance, their interaction for
knowledge transfer to the Chinese sister unit and those for which it only
influences development (e.g., products transferred to other locations
after testing in Poland). Thus, during the studied period, the network
centrality of the focal unit increased not only through higher volumes
mobilized in a fixed section of the network (e.g., Mota et al.,
2016)—especially in the two periods between 1986 and 2003 on
Table 3—but also through new volumes generated over an expanding
network of newly established sister units, especially from 2003 on-
wards.
The focal business unit has also become increasingly involved in
complex interorganizational routines (5), connecting not only to IOS (as
discussed above, at the dyadic level) but also to many other parts of
IKEA's network (e.g., Baraldi, 2008). These routines include order
management and logistics (especially in 1992–2003), which establishes
a connection with IKEA's retail and logistics units; product development
and implementation (especially in 2003–2008), which brings together
the whole network from raw material suppliers to retail units; and in-
ternational factory openings (from 2008 onwards), which connects with
other production units within Swedwood/IKEA Industry and their
suppliers. These connections entailed that the activities of Swedwood
West and those of the aforementioned actors became more closely
adapted to each other and that the focal unit's activities became more
firmly embedded in and reinforced the complex activity pattern
(Håkansson & Snehota, 1995) including all those actors.
The involvement of the focal unit, its role in orchestrating inter-
organizational routines of growing complexity, and its importance for
11
Journal of Business Research 100 (2019) 1–15
IKEA's entire network imply that Swedwood West/IIZ gained a more
and more central macro position in this network. Further, as already
discussed at a dyadic level, the drivers support each other also at net-
work level. Besides an expanded and more complex span of inter-
organizational activities, this unit also gained control of more and more
resources necessary for performing those activities (e.g., technical
competence, machinery, relationships with specialized technical sup-
pliers, and the PDC), which made all other actors in IKEA's internal and
external networks more dependent (6) on the unit. This higher depen-
dence means that the network position of Swedwood West/IIZ has at-
tained considerable centrality, and its disappearance from the network
would cause major damage to the entire IKEA network. This is because
of the dependence of IKEA's several critical interorganizational pro-
cesses on the focal unit and on its engagement, competencies, and re-
sources.
During the 30 years of the study period, we observed that the unit
won the trust and commitment (7) of other actors in the entire network,
which induced it to find itself new trusted partners and delegate to
them tasks in the same manner in which IKEA delegated tasks to
Swedwood West when it was a supplier. This implies an increasingly
central macro position in the network. This chain of delegation started,
especially, from the period when Swedwood West/IIZ got engaged in
new technology development (in the early 2000s) and became even
stronger when this unit was tasked with the responsibility of overseeing
technology transfer to other sister units (from about 2008). Finally, the
identity (8) of the focal business unit across the network developed from
being viewed just as a low-cost supplier, at the start of the analyzed
period, to being viewed as an innovator, to being even informally ac-
knowledged as a CoE by the entire IKEA Group, and to receiving the
new name “IKEA Industry Zbąszynek.” This implies that the unit has
indeed taken a very central network position.
The connections between the transformation and further develop-
ment of a CoE, its changing network position, and the eight factors
driving these changed positions are summarized in Fig. 2 below. The
model suggests that the enhancement of the three internal drivers
(competences, resources, and organizational structure) and the five
relational drivers (volumes, routines, dependence, trust and commit-
ment, and identity) improve the network position of a business unit. This
impact of the eight drivers concerns both its micro positions vis á vis
specific partners, that is, the strength of specific dyads, and its overall
macro position, that is, network centrality. Moreover, an improved set
of micro positions can also improve the overall micro position, as
suggested in the central oval in Fig. 2.
The relational drivers operate both within single dyads and across
the entire network embedding the business unit (both internally and
externally to the MNE). Importantly, as indicated by the two vertical
arrows in Fig. 2, internal and relational drivers sustain each other even
before impacting the network position of the business unit. For in-
stance, it is possible to trace the following sequence in our case: (1)
Swedwood West/IIZ's increased control over its internal resources (ERP
and other IT systems, unique machinery, and PDC) enabled (2) larger
volumes of both goods and information, which were exchanged as part of
its relationships with IKEA's downstream units (IOS, retail stores, and
logistics units) and with sister production units or own suppliers, which
in turn both enabled and required (3) stronger interorganizational rou-
tines, that is, closer activity links and deeper adaptations between
Swedwood West and its partners. The cumulative effect of (1) resource
control, (2) increased exchange volumes, and (3) stronger inter-
organizational routines had the fourth effect of increasing the depen-
dence (4) of single external partners (dyads) and IKEA's internal and
external network on Swedwood West, which finally led to (5) a stronger
and more central network position. This leads to a potential dynamic
pattern encompassed by the model in Fig. 2 which can be summarized
as follows: increased internal resources→ increased exchange vo-
lumes→ reinforced interorganizational routines→ increased depen-
dence of all actors→ improved network position. However, there are
E. Baraldi and M. Ratajczak-Mrozek
Fig. 2. A model connecting drivers of network position and the establishment of a CoE.
certainly many other patterns that further research can identify, in-
cluding the reverse pattern leading to the worsening of a network po-
sition.
As shown in Fig. 2, an improved network position supports the
process of becoming a CoE, and, in subsequent steps, also the degree of
the role intensity and importance of the CoE for the whole MNE. Finally,
the dotted arrows hypothesize a virtual (or vicious) cycle from higher
(or lower) role intensity and importance to the levels of the eight initial
drivers, which can further improve (or worsen) a unit's network posi-
tion, even if such a feedback loop was not empirically studied for the
case at hand. However, inspired by the case of Swedwood West/IIZ, one
can postulate the following loop: the importance of a CoE for the MNE
can increase the volume of internal resources allocated to it (Andersson
& Forsgren, 2000), which, in turn, can increase its importance as a CoE
and, possibly, improve its identity in relation to other units in the MNE.
Such an identity can trigger greater trust in the CoE, followed by a
further delegation of new and more complex or critical tasks. This can
further increase the volume of internal resources controlled by a CoE,
which would allow the CoE to perform more complex interorganiza-
tional routines (e.g., entire cycles of order management, production and
delivery, or innovation management projects covering idea generation
all the way to global implementation). Performing highly complex and
critical routines may also entail that the CoE does not simply follow the
scripts defined by the headquarters adapt its own activities to such
centralized scripts (Vives et al., 2010). Instead, the CoE may even be
involved in devising new complex routines and have other organiza-
tional units adapt to it, which would eventually increase even more the
network position and importance of the CoE.
6. Conclusions
Our analysis confirms the importance of three major groups of
drivers that condition the emergence of CoEs, which are mentioned in
the literature on MNEs. These drivers are as follows: the internal re-
sources of a business unit, the internal relationships with the parent
firm and other subsidiaries, and the business environment, which in-
cludes relationships with entities outside the MNE (Andersson &
Forsgren, 2000; Birkinshaw et al., 1998; Holm et al., 2005; Holm &
Pedersen, 1999). The novelty in our study is that it explores how these
driving factors (visible in our model presented in Fig. 2) lead to the
emergence of a CoE, which happens specifically through the acquisition
of a sufficiently strong and central network position by the focal unit.
Departing from a unit's internal resources and competencies, the
12
Journal of Business Research 100 (2019) 1–15
internal relationships with the headquarters and other subsidiaries
provide intangible and tangible resources. Without these internal re-
lationships, it would be impossible to diffuse the competencies devel-
oped in a subsidiary to other sub-units, thus posing an obstacle to the
emergence of a CoE. Finally, the external relationships of the subsidiary
not only enhance its competencies but also secure and enhance its
network position (Håkansson & Snehota, 1995; Johanson & Mattsson,
1992)—a condition that must be fulfilled for becoming a CoE.
The contribution of our study lies in showing how the interplay
between these groups of driving factors is reflected in the network
position of a focal subunit, which is crucial for the emergence of a CoE.
Precisely, we single out a set of drivers behind the changes in this
network position (both macro and micro positions). At the internal
level, we focus on the development of (1) competences, (2) internal re-
sources, and (3) organizational structure of the subunit. At the inter-
organizational level (both the dyad and the network, as well as within
and outside the MNE), we focus on changes in (4) exchange volumes, (5)
interorganizational routines, (6) mutual dependence, (7) trust and com-
mitment, and (8) identities. The constant interplay between these driving
factors and their impact on a unit's network position makes the emer-
gence of a CoE a dynamic process. Moreover, we demonstrate that, in
this process, the achieved degree of intensity and importance as a CoE is
not static (Ensign et al., 2000; Frost et al., 2002; Gonzalez et al., 2014),
but is dynamic in the sense that it can increase (but also decrease) over
time, depending on changes in the focal unit's network position.
A more general contribution of our study to MNE theory is that the
use of the notion of network position to frame CoEs helps to clarify the
relational nature of the very concept of CoE, which is about “excellence
in something in relation to someone” and “centrality in developing this
something and spreading it to others” within the MNE. However, ac-
cording to the IMP view, developing this something is dependent not
only on dynamics that are internal to the CoE but also on the interac-
tions of the unit with other organizations, inside and outside the MNE.
In this regard, our operationalization of the concept of network position
contributes toward isolating various elements that define such a posi-
tion. In particular, the number, strength, and nature of the subsidiary's
relationships frame its network position, and, hence, its ability to create
and spread knowledge and competencies for the rest of the MNE. This
ability can emerge from key features of business relationships such as
the volumes exchanged, the adaptations in interorganizational routines,
mutual dependence, trust and commitment in relation to particular
counterparts, and the brokerage possibility of connecting with third
parties. Thus, both the inputs to become a CoE (e.g., resources and
E. Baraldi and M. Ratajczak-Mrozek Journal of Business Research 100 (2019) 1–15

knowledge flows) and the outputs transferred to the rest of the MNE are
highly relational. This is based on the position of the CoE vis á vis
specific other organizations, according to the idea of micro positions,
and in the entire network structure, according to the idea of macro
position. Further, the network position of a business unit is fundamental
not only to becoming a CoE but also to attain the ability to operate daily
and continuously contribute value to the MNE. Apparently, all sub-
sidiaries do not enjoy network positions that are adequate for sustaining
their role as a CoE.
However, even the units who become CoEs, owing to their network
position, will witness changes in the degree to which they can perform
their role as CoE and their importance for the MNE because of the
complexities inherent to the notion of network position. A simple si-
tuation would be if both the micro and macro positions of the sub-
sidiary improve or get worse, thereby increasing or reducing the CoE's
role intensity and importance. However, an interesting possibility
would emerge if the micro and macro positions of a CoE move in op-
posite directions; what will be the role intensity of a CoE with an im-
proved macro position (centrality in the broader network) but wor-
sened micro position (i.e., weaker relationship) with the headquarters?
This is indeed not a remote possibility as subsidiaries who gain power in
the overall structure of the MNE tend to seek greater independence
from the headquarters (Ensign et al., 2000), which may worsen their
relationship with it.
From an even broader managerial viewpoint, our findings suggest
that MNEs would face a series of challenges in managing the develop-
ment and importance of CoEs unilaterally from their headquarters. The
first issue highlights the need for constantly re-inventing the compe-
tencies of these units in response to global dynamics (Augier & Teece,
2007). Therefore, it would only help momentarily to transfer a com-
petence from the headquarters to the subsidiaries, as market swings
would likely change its relevance (Borini & Fleury, 2011). Therefore,
CoEs need to consider the possibility of developing their competencies
by following the development of the markets and technologies they are
active in, more or less independently of the headquarters. However,
competencies are only one side of being a CoE; acquiring a strong
network position comprises the other half of this role. Here, the pos-
sibilities of control by headquarters are again limited; while they can
partly influence the MNE-internal distribution of activities and re-
sponsibilities among the various sub-units (thereby framing their in-
ternal network position), it is much more difficult for the headquarters
to influence the position of their units within the broader external
network.
A second managerial implication which is relevant for CoEs them-
selves is that, in order to assume CoE status, it is not sufficient to focus
on internal competencies. External relationships with partners outside
the MNE are essential. It is not only because they facilitate daily op-
erations and support the development of own competencies (they fa-
cilitate “excellence”), but also because they secure the sub-unit's posi-
tion in the network, protecting it against relocation of the CoE by the
headquarters.
This study is not without limitations. First, it provides results from a
single case, which needs to be validated with further research on a
larger population of CoEs from other MNEs, industries, and countries.
In particular, the network position of the studied unit constantly im-
proved, as also did its role intensity and importance as CoE. Therefore,
there is a need to study CoEs whose network position worsened. In this
study, we considered changes in both the role intensity and the im-
portance of the CoE as a single outcome. However, further research
should be dedicated to focus on these concepts—role intensity and
importance of CoEs—as possibly two separate issues. Moreover, as our
study only indicates the existence of connections between the drivers
and network position, more detailed process studies, possibly focusing
on a more restricted time period, should trace the detailed temporal
patterns and sequence through which the various drivers affect a unit's
network position. For instance, does internal competence come before
relational trust or internal resources and exchanged volumes?
Even if zooming into particular periods can deepen the analytical
possibilities, another limitation of this study is concerned with its
temporal boundaries: ending in 2014, our analysis hides further
changes in the role intensity and importance of this CoE. Hence, an
even longer timeframe would be advisable for further studies.
Alternatively, there should be an analysis of CoEs whose network po-
sition and intensity/importance change much faster than the one ob-
served in our study. This kind of further research would capture the
cycles between the eight drivers of network position and the im-
portance of a CoE, which we only hypothesized in this study. Finally,
the emergence and varying importance of CoEs can also be studied by
using role theory (Anderson et al., 1998; Biddle, 1986; Biddle &
Thomas, 1966), including the concept of roles of national subsidiaries
(Bartlett & Ghoshal, 1986). This can clarify the multiple roles played by
such MNE units (e.g., creator, leader, broker, and advisor) in relation to
various counterparts and based on their network position.
Declaration of interest
None.
Funding/acknowledgments
This work was supported by the National Science Centre, Poland
[grant no. UMO-2012/05/D/HS4/01138].

Appendix A. List of interviews

Respondent Date of interview(s) Job description of the respondent

R1. 29.03.2001, 11.10.2001, 19.02.2002, 12.04.2002, 15.07.2003 Product manager, IKEA of Sweden
R2. 19.04.2001 Purchase strategist 1, IKEA of Sweden
R3. 19.04.2001 Purchase strategist 2, IKEA of Sweden
R4. 21.08.2001, 22.08.2001 Administrative manager, Swedwood West
R5. 21.08.2001, 22.08.2001, 23.08.2001, 28.08.2002, 25.09.2002, 06.08.2003 Technical support, Swedwood
R6. 22.08.2001, 29.08.2002 Purchasing manager, Swedwood West
R7. 22.08.2001, 29.08.2002 Logistics manager, Swedwood West
R8. 22.08.2001 Warehouse supervisor, Swedwood West
R9. 23.08.2001, 29.08.2002 IT/IS manager, Swedwood West
R10. 23.08.2001 Babimost Factory manager, Swedwood West
R11. 24.08.2001, 25.09.2002 Technical support, Becker-Acroma
R12. 17.10.2001 Product technician, IKEA of Sweden
R13. 17.10.2001 Product support, IKEA of Sweden
R14. 19.02.2002, 20.06.2002 Supply planner, IKEA of Sweden
R15. 12.04.2002 Transport & Distribution manager, IKEA of Sweden
R16. 20.06.2002 Business controller, IKEA of Sweden
R17. 29.08.2002 Administrative manager, Swedwood West

13
E. Baraldi and M. Ratajczak-Mrozek
R18. 29.08.2002
R19. 30.08.2002, 26.09.2002
R20. 30.08.2002
R21. 30.09.2002
R22. 28.02.2007
R23. 10.02.2014, 02.04.2014
R24. 02.04.2014, 25.06.2014
R25. 04.07.2014
R26. 04.07.2014
R27. 30.07.2014
R28 13.08.2014
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Enrico Baraldi is a Professor at the Division of Industrial Engineering &Management,
Department of Engineering Sciences, Uppsala University. His research concerns strategies
in business networks, innovation, product development and the commercialization of
science. He has been involved in several projects to promote policies and new economic
models to stimulate antibiotic R&D and address the global challenge of antimicrobial
resistance. His works have been published in a broad range of journals including The
Lancet, Infectious Diseases, Science and Public Policy, European Management Journal,
Industrial Marketing Management, California Management Review, Technovation, Journal of
Business Research, Management Decision and the IMP Journal.
Milena Ratajczak-Mrozek is an Associate Professor in the Department of International
Marketing at the Poznań University of Economics and Business. Her main areas of re-
search include companies' relationships and cooperation in an international setting as
well as performance in the global market. She focuses on the analysis of both large
multinationals and SMEs from the high technology and furniture industries. Her book
“Network Embeddedness. Examining the Effect on Business Performance and
Internationalization” (Palgrave Macmillan) systematizes the concepts of business re-
lationships and network embeddedness, taking a new approach to internationalization.
She has served as the guest editor of the special issue of Industrial Marketing Management
and the IMP Journal.