The strategic development of subsidiaries in regional trade blocs

Frank McDonald (Bradford University School of Management, Bradford, UK)
Heinz Josef Tüselmann (Manchester Metropolitan University Business School, Manchester, UK)
Svitlana Voronkova (Department of International Finance and Financial Management, Centre for European Economic Research (ZEW), Mannheim, Germany)
Sougand Golesorkhi (Manchester Metropolitan University Business School, Manchester, UK)

Multinational Business Review

ISSN: 1525-383X

Publication date: 19 August 2011



The purpose of this paper is to explore the relationships between the strategic development of subsidiaries and the likelihood of subsidiaries exporting on an intra‐regional basis to European markets.


The paper defines the strategic development of subsidiaries as increases in autonomy, embeddedness in host locations and use of networks and host country sourcing. The location of subsidiaries in industrial clusters is also considered. Use is made of multinomial probit analysis of a survey of 391 UK‐based subsidiaries to identify the relationships between the strategic development of subsidiaries and supplying European markets.


The study finds some evidence that there are links between increasing networks and supplying European markets, but there is no evidence that developing host country sourcing is associated with European supply. Location in an industrial cluster is consistently associated with supplying European markets, and autonomy also appears to be closely associated with supplying European markets.

Research limitations/implications

Extension of the research is required to other regional trade blocs such as Mercosur and North American Free Trade Agreement. The role of networks and the links to location in industrial clusters require further exploration, and future research needs to include the services and knowledge‐intensive sectors.


The paper adds to the understanding of subsidiary development in the context of intra‐regional trading and thereby expands the literature on the regional strategy of multinationals. It highlights the importance of different types of autonomy for encouraging intra‐regional trade by foreign‐owned subsidiaries, and the central role of location in industrial clusters.



McDonald, F., Josef Tüselmann, H., Voronkova, S. and Golesorkhi, S. (2011), "The strategic development of subsidiaries in regional trade blocs", Multinational Business Review, Vol. 19 No. 3, pp. 256-271.

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