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Article
Publication date: 16 July 2010

Dimitris Manolopoulos

The purpose of this paper is to advance understanding of the context and essence of foreign investments in an intermediate‐level economy and to revitalize the discussion…

Abstract

Purpose

The purpose of this paper is to advance understanding of the context and essence of foreign investments in an intermediate‐level economy and to revitalize the discussion on the differentiated strategic roles of subsidiaries within the multinational enterprise (MNE) network.

Design/methodology/approach

A unique questionnaire‐based survey – including 112 usable responses – was carried out. The role of subsidiaries is categorized according to their market and value‐added scope. Pair‐wise analysis has identified six roles for foreign operations (local servers, advanced replicas, regional operators, regional hubs, global specialists, and world product mandates). Average responses, frequency distribution and statistical analysis have been used in order to identify the prevalence of each subsidiary type in Greece.

Findings

Findings indicate that foreign operations in the focal country have a rather market‐seeking rationale. However, a considerable percentage of MNEs aims at widening the functional scope of their subsidiaries through knowledge‐seeking investments. Subsidiaries in Greece seem to escape from an introverted focus on the local market through an intense export orientation towards EU countries and the Balkan region.

Research limitations/implications

The core of the paper is to identify subsidiary roles in a country of EU “periphery.” One should be very cautious in generalizing the results for more advanced economies. Moreover, limited attention is ascribed to firm‐specific determinants (e.g. size, years of operation, country of headquarters (HQs) origin) of subsidiary roles, and other environmental (e.g. situational constraints) characteristics.

Practical implications

Governments in small countries should provide the incentives for creating an attractive environment for more qualitative investments. International managers should not ignore the potentials for advanced knowledge‐related competitiveness of small countries. Foreign operations should reorient their investment interests in countries within regional blocs, since they can benefit from agglomeration economies.

Originality/value

A new classification for subsidiary roles is proposed. There is currently limited evidence on the differentiated subsidiary roles in a small economy. The paper is believed to be the first to present a detailed analysis, for Greece, of the strategic bases for MNEs' expansion.

Details

Management Research Review, vol. 33 no. 8
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 1 April 2003

Georgios I. Zekos

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination…

Abstract

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

Details

Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

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Article
Publication date: 31 March 2021

Nina Magomedova, Fariza Achcaoucaou and Paloma Miravitlles

The aim of this study is to explore the drivers of the evolution of a subsidiary’s strategic role from an ordinary subsidiary into a springboard subsidiary in…

Abstract

Purpose

The aim of this study is to explore the drivers of the evolution of a subsidiary’s strategic role from an ordinary subsidiary into a springboard subsidiary in multinational corporations, paying special attention to the role of subsidiary management in this transformation.

Design/methodology/approach

The authors apply a case study methodology to analyse the transformation of three Spanish subsidiaries of European multinational companies into springboard subsidiaries to pursue opportunities in the Latin American region.

Findings

The results present evidence that the development of a springboard subsidiary’s role is influenced by a set of preliminary factors that include: (1) the coincidence of a favourable economic change in the target region of expansion and unfavourable market conditions in the springboard subsidiary’s home market; (2) location-specific advantages of a subsidiary that allow it to develop unique capabilities, such as the ability to reduce the psychic distance between the headquarters and target region, to balance intra-regional conflicts within the target region, and to effectively transfer knowledge from the headquarters to the target region; and (3) micro-political headquarters-subsidiary negotiation processes as a result of the subsidiary’s strong initiative, peculiarities of the structure of a multinational company, and a strong dependency of the headquarters on the subsidiary’s unique capabilities.

Originality/value

The study contributes to the International Business literature by providing an in-depth analysis of the evolution of springboard subsidiaries and explaining how ordinary subsidiaries located in saturated markets can trigger organisational change and achieve the extension of their strategic role.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 8 April 2005

Ricardo Madureira

This paper illuminates the distinction between individual and organizational actors in business-to-business markets as well as the coexistence of formal and informal…

Abstract

This paper illuminates the distinction between individual and organizational actors in business-to-business markets as well as the coexistence of formal and informal mechanisms of coordination in multinational corporations. The main questions addressed include the following. (1) What factors influence the occurrence of personal contacts of foreign subsidiary managers in industrial multinational corporations? (2) How such personal contacts enable coordination in industrial markets and within multinational firms? The theoretical context of the paper is based on: (1) the interaction approach to industrial markets, (2) the network approach to industrial markets, and (3) the process approach to multinational management. The unit of analysis is the foreign subsidiary manager as the focal actor of a contact network. The paper is empirically focused on Portuguese sales subsidiaries of Finnish multinational corporations, which are managed by either a parent country national (Finnish), a host country national (Portuguese) or a third country national. The paper suggests eight scenarios of individual dependence and uncertainty, which are determined by individual, organizational, and/or market factors. Such scenarios are, in turn, thought to require personal contacts with specific functions. The paper suggests eight interpersonal roles of foreign subsidiary managers, by which the functions of their personal contacts enable inter-firm coordination in industrial markets. In addition, the paper suggests eight propositions on how the functions of their personal contacts enable centralization, formalization, socialization and horizontal communication in multinational corporations.

Details

Managing Product Innovation
Type: Book
ISBN: 978-1-84950-311-2

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Article
Publication date: 6 November 2019

Cigdem Baskici

Although there have been a considerable number of studies regarding subsidiary role typology in multinationals’ management literature, there appear to be few studies that…

Abstract

Purpose

Although there have been a considerable number of studies regarding subsidiary role typology in multinationals’ management literature, there appear to be few studies that consider knowledge-based role typology from the network-based perspective. The purpose of this study is to fill this gap and extend the study of Gupta and Govindarajan (1991). Thus, the study focuses on answering the following research question: Do subsidiaries have different roles in terms of knowledge flows within a multinational company (MNC)?

Design/methodology/approach

This empirical study has been carried out as an explorative single case study. An MNC with 15 foreign subsidiaries headquartered in Turkey, which operated in the manufacturing of household appliances and consumer electronics, has been selected as the case. Knowledge transfer is analyzed in this MNC from the network perspective.

Findings

Four role typologies are detected for subsidiaries of the MNC: collector transmitter, collector diffuser, converter transmitter and converter diffuser.

Research limitations/implications

Findings of this study are specific to this case. Testing the findings in a sample consisting of subsidiaries of MNCs producing transnational products may contribute to the generalizability of these roles.

Practical implications

This study offers potentially important findings for MNC managers to use. First, in this study, knowledge flows' route could be defined within MNCs’ dual network. Second, role typologies could inform MNC managers to design their MNCs’ knowledge network.

Originality/value

The suggested typologies are expected to more accurately define the roles of subsidiaries within contemporary MNCs which are accepted to be transformed from hierarchical structures to network-based organizations.

Details

Review of International Business and Strategy, vol. 29 no. 4
Type: Research Article
ISSN: 2059-6014

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Article
Publication date: 10 October 2008

Cindy Qin, Prem Ramburuth and Yue Wang

A major challenge faced by MNCs is how to manage knowledge transfer between headquarters and subsidiaries located in dissimilar cultural contexts. While the impact of…

Abstract

Purpose

A major challenge faced by MNCs is how to manage knowledge transfer between headquarters and subsidiaries located in dissimilar cultural contexts. While the impact of culture on knowledge transfer has been widely acknowledged, an important gap in the literature is how cultural distance (external variable) and subsidiary roles (internal variable) interact in impacting on knowledge flows in MNCs. The purpose of this paper is to present an integrative model to advance understanding of the interaction between cultural distance and subsidiary roles in the knowledge transfer process within MNCs.

Design/methodology/approach

An environment‐strategy‐performance framework is developed based on a review of extant literature. A case study is used to substantiate the framework. It was conducted in an MNC in China and involved in‐depth interviews with expatriate and local managers.

Findings

Knowledge transfer in MNCs is influenced by external context (cultural distance) and internal mechanisms (subsidiary roles). The direction and magnitude of knowledge flows is related to the strategic roles of the subsidiary and is influenced by cultural distance. Negative impacts are evident where cultural distance is large, with positive impacts where cultural synergies occur. Changes in Chinese cultural values impacting on knowledge transfer are also evident.

Originality/value

The conceptual model combines internal resource and external environmental perspectives. It links literature on cross‐cultural management, subsidiary roles and MNC knowledge transfer. Furthermore, it explores linkages between culture and knowledge transfer, cultural distance and subsidiary roles, knowledge transfer and subsidiary roles. The model is operationalised in a China‐based case study.

Details

Chinese Management Studies, vol. 2 no. 4
Type: Research Article
ISSN: 1750-614X

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Article
Publication date: 19 August 2010

Si Zhang and Robert Pearce

The paper investigates the importance of six sources of technology as used by MNE subsidiaries operating in China. These are determined by the strategic roles of the…

Abstract

The paper investigates the importance of six sources of technology as used by MNE subsidiaries operating in China. These are determined by the strategic roles of the subsidiaries. This facilitates analysis of the role of technology both in the competitive development of the subsidiaries and Chinese industrialization. Though these subsidiaries build their bridgeheads in China (mainly to supply the Chinese market) around established, standardized parent‐group technology, there is a tendency to broaden technological scope (mostly locally accessed or generated), especially to generate the capability to develop new goods that target the Chinese market.

Details

Multinational Business Review, vol. 18 no. 3
Type: Research Article
ISSN: 1525-383X

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Article
Publication date: 11 January 2011

Kyung‐Tae Kim, Seung‐Kyu Rhee and Joongsan Oh

The purpose of this paper is to investigate the strategic role evolution of client‐following local subsidiaries of foreign automotive parts suppliers in China.

Abstract

Purpose

The purpose of this paper is to investigate the strategic role evolution of client‐following local subsidiaries of foreign automotive parts suppliers in China.

Design/methodology/approach

The units of analysis are five local subsidiaries of foreign automotive parts suppliers dealing with Beijing Hyundai Motor Corporation in China; a case study methodology based on interviews with managers of the subsidiaries was employed.

Findings

First, a modified version of Ferdows's model can be utilized to aptly analyze the strategic role changes of subsidiaries of foreign automotive parts suppliers which have followed their major client into the emerging market. Second, the development of a subsidiary's functional capabilities varies from subsidiary to subsidiary, depending on the headquarters' (HQ) global strategy and the nature of its interactions with external players. Third, the strategic role evolution of a subsidiary is critically influenced by the levels of its functional capabilities. Finally, the mechanism for a subsidiary's strategic role evolution can be explained by the interactions of three critical factors: the task assigned by HQ, the subsidiary's choice, and the local environment.

Research limitations/implications

The external validity of this case study is yet to be verified and the possible gaps in perceptions between the subsidiary and the HQ have not yet been addressed. This is the first case study to address the strategic role evolution of client‐following subsidiaries of automotive parts suppliers.

Practical implications

This study presents the HQ with a framework for role assignments and a checklist for planning the development of a subsidiary's capabilities.

Originality/value

This is the first paper to investigate the strategic role evolution of local subsidiaries of foreign automotive parts suppliers in the emerging market, and it finds critical factors affecting capability development, which in turn shape the subsidiary's process of role evolution.

Details

International Journal of Operations & Production Management, vol. 31 no. 1
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 17 August 2012

Chiraz Saidani, Yao Amewokunu and Assion Lawson‐Body

This study aims to develop a new reference framework which accounts for the motivations of headquarters (HQs) from developed countries and the roles of their subsidiaries

Abstract

Purpose

This study aims to develop a new reference framework which accounts for the motivations of headquarters (HQs) from developed countries and the roles of their subsidiaries established in developing countries.

Design/methodology/approach

A multiple case studies approach was used for this research. The data were collected using a directed interview with 20 participants in eight foreign subsidiaries established in Tunisia.

Findings

The results show that the studies of subsidiaries can be classified into “workshop” subsidiaries and “market” subsidiaries according to the level of their added‐value activities, the scope of the market served and the level of their decision‐making autonomy. Furthermore, the development trajectory of these subsidiaries takes the form of two consecutive phases. In the first phase, the subsidiaries begin acquiring new competencies which allow them to integrate value‐creating activities that are far beyond intensive labor or low‐technology activities. Subsidiaries in the second phase intervene more and more in strategic decisions related to their growth. While the “workshop subsidiaries” in this study are still in the first phase, the “market subsidiaries” have succeeded in broadening their regional responsibilities within the multinational.

Research limitations/implications

This research had a number of limitations; the most important is the explanatory and qualitative method used in this paper. In addition, this research solely focused on foreign subsidiaries that are still in business. It also would be interesting to investigate the subsidiaries that are stalled or shrank. The perspective of the HQs and the Western institutional players would be also relevant to explore.

Originality/value

Despite the abundance of works on subsidiaries' role, there has been very little research that looks explicitly at the role of foreign subsidiaries in developing countries. This research expands the existing literature and provides evidence on the motivation of multinational companies as well as the role of their subsidiaries in developing countries. This study helps us rethink the redistribution of decision‐making power between the HQs and the subsidiaries established in the developing countries.

Details

Multinational Business Review, vol. 20 no. 3
Type: Research Article
ISSN: 1525-383X

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Book part
Publication date: 17 February 2017

William G. Egelhoff and Joachim Wolf

The role of HQ in the contemporary MNC has recently received a good deal of research attention. This article argues that the contemporary MNC requires an organizational…

Abstract

The role of HQ in the contemporary MNC has recently received a good deal of research attention. This article argues that the contemporary MNC requires an organizational model that can embrace different perspectives of the HQ role. The same HQ must at times hierarchically lead the firm and at other times assume a more passive, facilitative role that allows direct interaction and decision making among the subunits to coordinate interdependency within the firm. To achieve this integration, the article proposes a contingency model that specifies when the HQ should assume a hierarchical role and when it should assume a facilitative role.

Details

Multinational Corporations and Organization Theory: Post Millennium Perspectives
Type: Book
ISBN: 978-1-78635-386-3

Keywords

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