Search results

The purpose of this paper is to investigate the role of networks and autonomy in competence development of foreign-owned subsidiaries (FOS) located in Taiwan.

Survey data have been collected from FOS located in the mid-range emerging economy of Taiwan and analysed using structured equation modelling and fuzzy set qualitative comparative analysis (fsQCA) techniques.

The results show that decision-making autonomy and intra-organisational networks are important factors for primary and support competence development. However, by using fsQCA technique the authors also show that many subsidiaries differ from that main pattern. For instance, local business and non-business networks can also contribute to primary competence development, but only in high autonomy subsidiaries.

The originality of this paper lies in the detailed investigation of how fine grained network relationship strengths (intra-, business-, non-business local networks) affect different levels of subsidiary competencies (primary and support activities). The authors also provide novelty in applying a combination of symmetric (structural-equation modelling – partial least squared) and non-symmetric (fsQCA) analytical techniques.

The purpose of this paper is to explore how the proportion of skilled jobs in subsidiaries is influenced by resource gaps created by subsidiary development.

This paper develops a range of propositions that connect the constructs of effective autonomy and organisational relationships with subsidiary employment. Propositions are built on an extensive literature review based on such approaches as the resource‐based view, transaction cost economics, network approach, and institutional theory.

The framework developed in the paper suggests that a higher proportion of employment in skilled jobs in subsidiaries is most likely in cases where subsidiary entrepreneurship, role specialization, and absorptive capacity are higher. Conversely, the proportion is likely to be lower in cases of increased institutional distance from the parent company.

The conceptual model can help parent company managers assess the likely effects of developments in effective autonomy and organisational relationships in their subsidiaries. Subsidiary managers can assess the possible impact of such factors as development of entrepreneurial activities, specialization within the multinational corporation supply chain and enhancement of absorptive capacity on the proportion of skilled jobs.

This paper is the first to describe subsidiary development from a skilled job perspective. It further develops the concept of autonomy and introduces the term “effective autonomy”.

The development of multinational subsidiaries is of interest to academics, policy‐makers and the business community. Although there is a considerable literature on subsidiary typologies, there is a dearth of empirical investigation to accompany this. This article reports on a field‐work survey which was undertaken to analyse the nature of subsidiary development in the UK economy. A large sample of companies were asked to provide details of their value‐added activities and degree of strategic autonomy granted by their parent organisations. These data were collected in respect of their entry to the UK and at the time of the survey so that a comparison would yield conclusions about subsidiary development. The analysis of the data reveals that subsidiary development is associated with the ownership (i.e. geographical location) of the parent company, as well as the entry mode which the parent company chooses to enter the host economy. The precise nature of these relationships is complex and the article concludes by suggesting some future research agendas in this area.

This paper explores the potential competitive advantages from the development of an internal network of subsidiaries and external network of alliances. Given the broad scope and lack of systematic investigation in prior research, clinical field research was conducted in eleven Japanese subsidiaries in China. Our in‐depth interviews revealed that there are benefits and costs associated with the development of both subsidiary networks and alliance networks. While there are exploitation and exploration benefits from subsidiary network development, internationalizing firms (especially smaller firms) are subject to the liability of foreignness. Alliance network development is an effective way to mitigate this liability if internationalizing firms choose the right alliance strategy.

Purpose – To explore the influence of autonomy on subsidiaries' development and transfer intensities and their interrelationship.

Methodology/approach – We develop a theoretical model that we test on a sample of 85 innovation projects developed in 63 subsidiaries in 14 countries. The data were collected by personal interviews and analysed using the Partial Least Squares technique.

Findings – Autonomy is an important driver of subsidiaries' innovation intensity although, surprisingly, we find no influence on transfer intensity. We confirm the positive relationship between subsidiary innovativeness and its role as provider of new competence to sister units within the multinational enterprise (MNE).

Research limitations/implications – In line with previous studies, we can say that autonomy is a desirable result of subsidiary evolution. We can also suggest that overall subsidiary autonomy is beneficial not just to the subsidiary but to the rest of the MNE, since the more the subsidiary innovates the more related competence will be transferred. In other words, innovation efforts at subsidiary level are critical to sustain MNEs' overall competitive advantage.

Practical implications – First, it seems that the more a subsidiary's innovativeness is fostered, the more transfers to other units will occur. Second, we have seen how autonomy is beneficial to the innovative activity of the subsidiary and that it does not seem to harm transfer intensity.

Originality/value – Following studies that point out the potential trade-off between the output of development and transfer activities by subsidiaries, our research contributes by empirically testing the relationship between the intensities of subsidiary innovation development and transfer.

This chapter provides an empirical investigation into the process by which subsidiaries in multinational firms add capabilities in a given line of business. We describe the process of subsidiary capability development as a non-recursive relationship between the parent's transfer of decision-making power and capability development, which then affects subsidiary performance. The empirical results from survey data confirm such mutually reinforcing mechanisms and highlight the importance of both external and internal forces that facilitate or impede the developmental process.

The article aims to explain how the drivers of subsidiary evolution influence a multinational company's (MNC) research and development (R&D) subsidiary's evolution over time.

The article draws on insights from a longitudinal comparative case study of three Swedish MNCs' Indian R&D units.

The study shows that the evolution of R&D units is a triangular showdown among headquarter assignments, local market constraints, and opportunities, and that subsidiary choice is an important driver of both mandated extension and stagnation. We summarize our findings in various propositions that emphasize different drivers over time and that highlight the strong impact of a subsidiary's understanding of the corporate immune system on the evolution of that subsidiary's R&D mandate.

Drawing on the common limitations of a case study approach, further research is needed to test the suggested propositions with larger samples, ideally with subsidiaries in other emerging and developed markets.

The study illustrates the risks involved for subsidiary managers when pushing an R&D mandate-related initiative too far and provoking the corporate immune system. For headquarters management, the study highlights the importance of understanding that the development of R&D competence and capability at a subsidiary cannot be guided solely by headquarter assignments and local market characteristics; rather, the subsidiary's initiatives also need to be considered.

The study contributes to the literature on R&D internationalization by showing how the drivers of subsidiary evolution influence a subsidiary's R&D mandates over time and that subsidiary choice is an important driver of both mandated extension and stagnation.

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.

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.

Strategizing in a multinational corporation requires balancing global and local strategy. The purpose of this paper is to provide some insights into how multinational corporations succeed in this endeavor.

The authors conducted a detailed qualitative investigation of the strategy-development processes at Gamma – a European multinational corporation in the materials industry. Specifically, the authors investigated strategy development in the DACH region (i.e., for the German, Austrian and Swiss subsidiaries). To collect data, they conducted interviews with key informants at the corporate headquarters and the subsidiaries and collected archival data.

The data revealed that Gamma had found an approach to strategy development that balanced its global strategy with local conditions, finding a suitable way to align its global and local strategies. The authors therefore unravel three key insights revolving around subsidiaries’ unique interpretations of the basic idea of global strategy, idiosyncratic strategy development processes in subsidiaries and globally and locally synchronized temporal structures.

Knowing how to balance the strategic needs of headquarters and subsidiaries allows multinational corporations to follow a general strategy while simultaneously developing a local market strategy responsive to the individual market requirements.

Purpose – The chapter aims at enhancing our understanding on how the headquarters involvement and subsidiary entrepreneurship during the innovation development process of multinational corporation (MNC) subsidiaries affect the outcome of the innovation in terms of their home market- and organisational performance.

Design/methodology/approach – The study is based on cross-sectional questionnaire survey data from 87 innovation projects in 64 MNC subsidiaries located in Europe, East Asia and the United States.

Findings – Subsidiary entrepreneurship during the innovation process has a positive impact on the subsidiary's market performance and a negative impact on its organisational performance, whereas the involvement of corporate headquarters has a negative impact on the market performance, and a positive impact on the organisational performance.

Research implications – The research provides a starting point for further research on the relationship between the management of innovation processes among MNC subsidiaries and the performance outcomes of such processes.

Practical implications – The study implies that there is a need for corporate managers to take into account the entrepreneurial endeavour of subsidiaries when formulating corporate innovation strategies.

Originality/value: Integrates a top-down and bottom-up perspective on the strategic management of innovation development processes in MNC subsidiaries.