The 'transnational corporation' paradigm is increasingly at odds with empirical findings on international innovation strategy. Analysing a longitudinal case study, we show that the firm's international R&D subsidiaries can be a powerful force that can shape strategy even more than headquarters can. From a literature review that identifies factors and mechanisms by which the firm's periphery is likely to exert this influence, we explore these factors and mechanisms by applying them to our case. Our findings show that international innovation strategies are unlikely to succeed if international R&D subsidiaries use their capabilities and market power to oppose the implementation of this strategy.