Search results

Subsidiary units must respond to emerging threats including disaggregation of value chains and increased headquarters monitoring and control which have led to a cycle of subsidiary decline. The authors recognize the value of subsidiary initiatives as a short‐term response but argue that subsidiary long‐term survival and growth will depend on the unit's ability to align with its parent strategic activities and knowledge base through developing vertical embeddedness.

This research is part of an ongoing quantitative and qualitative study programme of Irish subsidiary operations of foreign MNCs. This paper integrates the authors' broader research to date including both in‐depth interviews within a focal case combined with a comprehensive review of the literature relating to MNC and subsidiary management in identifying how subsidiaries can respond to current challenges.

In contrast to the dominant view in the literature, this research found that subsidiaries can respond to emerging threats by integrating their activities and deepening their alignment with their parent operation. The authors identify three pillars in developing a strategy of alignment – strategic embeddedness or ensuring development of subsidiary strategy in line with headquarters stated objectives, relational embeddedness determined by trust relationships and a history of consistent subsidiary delivery and finally knowledge embeddedness facilitated through coalescent knowledge creation and collaborative effort in line with headquarters strategy and direction.

Results from the survey are subject to the standard limitations and a larger pool of interviewees may have reinforced the qualitative findings.

Subsidiary managers need to be aware of how closer integration of unit activities with headquarters and the management of knowledge outflows can reduce the risk of relocation and better position subsidiaries for survival and growth. To date the emphasis on subsidiary initiative has overshadowed the benefits of aligning with headquarters strategy, a more feasible alternative for many subsidiaries which do not enjoy strategic independence.

By demonstrating the benefits of alignment with headquarters, this paper identifies a valuable alternative perspective to the predominant view in the literature that subsidiary survival is dependent on subsidiary initiative. Interesting insights into how alignment can be achieved are also provided. Capturing both the subsidiary and parent perspectives provides valuable insights.

This research aims to provide a new perspective on the evolving linkages between LAs and FSAs in the context of the technology-based manufacturing industry. Firm-level competitive strengths in an international context build upon the combination of (largely) exogenous location advantages (LAs) and endogenous firm-specific advantages (FSAs). The authors focus especially on the decay of LAs over time, which has been observed in many highly developed countries during the past decades. The authors show how the strengthening of FSAs can substitute for decaying LAs, thereby safeguarding against the demise of entire industrial regions.

The authors examine the technology-based manufacturing industry in Belgium, building upon an analysis of survey responses by 66 firms including a subgroup of 26 multinational enterprise (MNE) subsidiaries. The professional association representing this industry in Belgium (Agoria) viewed the firms included in the survey as representative for Belgian technology-based manufacturing in terms of the LAs they presently build upon (or location disadvantages they face) and the internal strengths they command relative to (foreign) rivals. The investigation uncovered the decay of critical LAs in Belgium and in parallel, the rise of ‘compensating’ FSAs of Belgian operations relative to foreign firms, including, especially, MNE sister subsidiaries in other countries. The authors also conducted 23 in-depth interviews with senior level managers (CEOs and senior vice presidents) of technology-based firms, including 10 subsidiaries of foreign-owned MNEs, which validated our analysis of the interplay between LAs and FSAs.

The findings reveal that since inception, Belgian manufacturing operations experienced an overall decay in their critical LAs by 23% on average. Despite this, several Belgian subsidiaries of foreign MNEs consider themselves as commanding a resource-base superior to that of the next-best-in-class subsidiaries. Furthermore, when assessing the dynamic interplay between LAs and FSAs, there is some evidence that the decay of LAs fueled the quest for – and firm-level journey toward – stronger FSAs.

The originality of this study is the alternative perspective to the conventionally assumed “positive-positive” relationship between LAs and FSAs. Prior management research has not examined the impact of decaying LAs on new FSA-creation in the realm of technology-based manufacturing.

Research examining the joint role of serial acquisitions and subsidiary autonomy in holistic value provision within servitizing industrial firms is scarce. Thus, this paper aims to investigate the role of serial acquisition and subsidiary autonomy in providing value within servitizing industrial networks.

A conceptual framework is developed based on the case study of a large Swedish industrial group specializing in selling industrial products and providing industrial solutions to business customers through its numerous subsidiaries.

The analysis of 14 interviews with the five subsidiaries and seven customer firms and secondary data reveals interesting findings concerning the role of serial niche acquisition strategy and subsidiary autonomy in customer value provision in servitizing organizations. In particular, the authors find that the role of acquisitions in industrial firms extends beyond growth to customer sensing and proximity. Likewise, the authors find that subsidiary autonomy facilitates value provision to customers in industrial networks.

The paper provides a more nuanced understanding of how serial acquisitions and subsidiary autonomy are intertwined and jointly affect industrial firms’ value provision activities amidst the servitization transition in an intraorganizational network.

This study aims to investigate the influence of parent company personnel embedding on the stock price crash risk (SPCR) of listed companies, along with the moderating effect of disparate locations between parent and subsidiary companies and other major shareholders.

This research empirically tests hypotheses based on a sample of listed subsidiaries in China during the period between 2006 and 2021.

Our results demonstrate that personnel embeddedness in the parent company significantly alleviates SPCR in subsidiaries. This effect is even more substantial when the parent and subsidiary companies are in different places. However, other major shareholders in the subsidiary company weaken it. Our additional analysis indicates that, relative to executive embeddedness, director embeddedness exerts a stronger effect on the SPCR of the subsidiary. Mechanism examination reveals that the information asymmetry and the level of internal control (IC) within the subsidiary are significant channels through which the personnel embeddedness from the parent company influences the SPCR of the subsidiary.

This study expands the literature on how personnel arrangements in corporate groups within emerging countries influence SPCR. We have extended the traditional concept of interlocking directorates to corporate groups, thereby broadening the understanding of the governance effects of interlocking directors and executives from a group perspective.

This chapter presents an in-depth inductive analysis of a parent organization and the network of subsidiaries that it has created. The authors identify the significance of organizational processes label as “disciplining entrepreneurialism.” These are activities that encourage entrepreneurial individuals to propose and lead new businesses while also promoting strong identification with the parent firm. The authors explore the emergence of this phenomenon through an examination of subsidiary–headquarter relations. While conventional conceptualization of inter-organizational collaboration has tended to exclude ­subsidiary–headquarter network relationships, we use the Systems of Exchange framework (Biggart & Delbridge, 2004) to categorize disciplined entrepreneurship alongside market, hierarchy, and network relations. Disciplining entrepreneurialism is not experienced as either market nor hierarchy by the individual members in the subsidiaries, and these subsidiaries move between the two in ways that are not adequately captured as a network either. This disciplining entrepreneurship approach can thus be contrasted with networks as well as differentiated from both markets and hierarchies. Entrepreneurship is encouraged while maintaining commitment to the overarching enterprise of the parent company.

This paper aims to present the impact of several likely trajectories of development for global industries, namely, re-shoring, regionalization, diversification and replication, recently identified by the United Nations Conference on Trade and Development, on the evolution of the corporate parenting styles (CPSs) of multinational corporations (MNCs).

This viewpoint presents a novel view of CPSs as a set of relationships between the corporate centers of MNCs and their subsidiaries, including domestic ones, identifies the most likely connections between anticipated trajectories of development in global industries and the evolution of CPSs of MNCs and outlines directions for further research.

The anticipated trajectories of the development of global industries may result in changes in prevailing CPSs and lead to the proliferation of previously less common parenting styles. Although many of the anticipated changes in CPSs may be pursued by corporate headquarters (CHQs), a combination of powerful subsidiaries putting bottom-up pressure on CHQs and powerful owners capable of imposing requirements on top management teams and generating top-down pressure may affect the CPSs used by corporations.

The authors connect possible trajectories of development for global industries with the evolution of CPSs of MNCs.

The aim of the chapter is to evaluate the concept of corporate parenting styles, identify missing elements in the theoretical constructs, and develop new theoretical constructs.

The chapter provides a summary of the existing literature on corporate parenting styles and uncovers the missing elements in the theoretical constructs. New theoretical constructs fill the gaps.

The chapter presents a new typology of corporate parenting style by combining corporate parents’ processes of adding value to and extracting value from subsidiaries. The five-type typology of corporate styles outlines the different levels of value addition and value extraction and various degrees of reciprocity in both processes. This chapter determines the most important factors that affect the selection of corporate parenting style. It postulates that the multinational corporation should exhibit different parenting styles toward its subsidiaries simultaneously and should be ready to amend its parenting styles to reflect changes in a subsidiary’s strategy and its motives for corporate ownership.

A new agenda for empirical studies oriented toward variability of parenting styles is proposed. Empirical tests of our propositions are needed. I encourage researchers to extend our research by considering the regional (supra-national), industry, and individual levels of analyses.

The chapter provides a more realistic view of corporate parenting styles than that found in the previous literature and outlines promising directions for further theoretical and empirical research.

This chapter investigates whether traditional design-oriented coordination instruments or more modern management concepts have a stronger influence on the success of forward technology transfers within MNCs.

We conducted an empirical study analyzing the relative influence of (a) traditional coordination instruments (structural, technocratic, and person-oriented) and (b) modern management concepts (epistemic community and absorptive capacity) on the success of forward technology transfers within MNCs.

The study finds evidence that the traditional coordination instruments relate to specific aspects of the success of such transfers. Comparing the different types of coordination instruments, this chapter shows that not only the person-oriented, but also the structural and technocratic coordination instruments relate positively with the achievement of technology transfer goals. The study finds stronger relationships between the traditional coordination instruments and the technology transfer goals than between the modern management concepts and the technology transfer goals.

We believe that these results have important implications for the management of international technology transfers in particular and for the focus of future (international) management research in general. Future MNC research studies need to include traditional coordination instruments, since they continue to strongly influence organizational behavior and outcomes. This would help to make organizational research on MNCs more cumulative and complete.

This chapter contends that the international business (IB) and strategic management (SM) fields have many commonalities that should be considered in a turbulent globalized business context. IB studies refer to the need for local integration and local adaptation whereas empirics in SM pinpoint the complementary effects of central planning and decentralized decision-making. We present and synthesize these rather field specific perspectives and try to synthesize insights from both fields in an adaptive strategy-making model including the effects of autonomous subsidiary initiatives and intended mandates from corporate headquarters. The model considers local subsidiary actions of both operational and strategic nature and we argue that it may be futile to distinguish between these effects as incremental operational responses can cumulate into more substantial changes over time with dimensions of strategic adaptation. The model provides a foundation for further considerations about how to combine central intent and direction with decentralization and autonomous initiatives in the multinational corporation.

Purpose – The purpose of this conceptual chapter is to discuss the limitations of the network organization in multinational corporations (MNCs). Since many IB/IM publications concentrate on the advantages of this organizational form, the focus of the chapter is on identifying the limitations that MNCs need to be aware of when they use network organizations.

Methodology – The analysis is based on a sound review of the literature that refers to the network organization in general and its application in MNCs.

Findings – The chapter shows that MNCs present a context that can aggravate the problems of a network organization. Four types of problems are identified: (1) knowledge transfer between MNCs’ subunits, (2) trust-building and corporate culture within MNCs, (3) subsidiary development and subsidiary managers’ stress, and (4) additional problems of a more general nature.

Practical implications – As a result of these problems, it is expected that the formal, hierarchical structure will remain an important organizational instrument for MNCs. The chapter specifies in which ways the formal organizational structure can help to reduce the limitations of the network organization. Finally, the chapter argues that, among the formal organizational models, the matrix structure should be considered more intensively in the future.

Originality/value of chapter – Since existing discussion of the network organization in MNCs tends to ignore the limitations and downsides of this organizational form, the chapter contributes to a more balanced understanding of the network organization.