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Article
Publication date: 9 May 2019

Marc André Baumgartner and Esther Tippmann

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

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

Journal of Business Strategy, vol. 40 no. 3
Type: Research Article
ISSN: 0275-6668

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Article
Publication date: 9 October 2017

Anders Pehrsson

The study draws on the resource-based view and the contingency view of strategy. The purpose of this paper is to contribute to international strategy literature by…

Abstract

Purpose

The study draws on the resource-based view and the contingency view of strategy. The purpose of this paper is to contribute to international strategy literature by extending the current understanding of foreign subsidiary’s competitive strategy in terms of cost leadership and product differentiation.

Design/methodology/approach

Hypotheses concern associations between corporate support building on product and skills relatedness and subsidiary strategies. Also, it is hypothesized that strategies are due to the type of local competitive intensity. The hypotheses were tested on wholly owned subsidiaries of Swedish industrial firms in Germany, the UK and the USA.

Findings

Product and skills relatedness between the subsidiary and the corporate core unit are positively associated with the subsidiary’s emphasis on cost leadership. Also, a positive association was found between skills relatedness and product differentiation, and extensive competitive intensity strengthens the relationship.

Research limitations/implications

The study specifies what business relatedness is needed for a subsidiary’s competitive strategy; skills relatedness is more important than product relatedness; the type of local competitive intensity is important; corporate support and local strategy operate simultaneously.

Practical implications

Management is advised to implement a foreign subsidiary’s competitive strategy by recognizing the mechanisms identified in this study.

Originality/value

In a unique way, the study captures the role of corporate support of a foreign subsidiary’s competitive strategy relying on business relatedness and the importance of aligning the strategy with competitive intensity.

Details

European Business Review, vol. 29 no. 6
Type: Research Article
ISSN: 0955-534X

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Book part
Publication date: 20 October 2011

Dirk Morschett and Hanna Schramm-Klein

Purpose – Taking a configurational perspective, this study explores if there are different market entry strategies used and if there are ideal configurations of subsidiary

Abstract

Purpose – Taking a configurational perspective, this study explores if there are different market entry strategies used and if there are ideal configurations of subsidiary strategy in different types of foreign countries.

Methodology – The study is based on a sample of 238 subsidiaries of German companies that are located in 38 different countries. Capturing many different facets of the subsidiary strategy, the configuration of top performers in different environments is identified. With a ‘fit as profile deviation’ approach, it is investigated whether the strategy of the top performers indeed constitutes an ideal strategy.

Findings – The host countries of the subsidiaries can be clustered in four types: BRICs, Eastern Europe, Western Europe and the USA. Chosen market entry modes differ significantly between those four host country types. The top performing subsidiaries in each of the country types have distinct strategy patterns. However, deviation from the strategy profile of the top performers only explains the lower performance of subsidiaries in country types BRICs and Eastern Europe. Performance differences between subsidiaries in Western Europe and the USA cannot be explained with the variables captured in this study.

Research limitations/implications – Taking a configurational approach on subsidiary strategy proves to be a promising path to create new insights. But subsidiary strategy pattern alone is insufficient to explain performance in two country types. Thus, other influence factors must be investigated. Furthermore, the study did explore subsidiary strategy patterns with a cluster analysis, without ex ante hypotheses about the patterns. Hence, further studies are needed to re-investigate these patterns.

Details

Entrepreneurship in the Global Firm
Type: Book
ISBN: 978-1-78052-115-2

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Article
Publication date: 1 February 1993

Joy M. Pahl and Kendall Roth

This study examined the relationship between the headquarters and the foreign subsidiaries of multinational corporations (MNCs). Hypotheses concerning the strategies

Abstract

This study examined the relationship between the headquarters and the foreign subsidiaries of multinational corporations (MNCs). Hypotheses concerning the strategies pursued by each MNC, intergroup conflict, conflict management styles, integrating mechanisms, and the effectiveness of the headquarters‐subsidiary relationship are developed and tested. There were no significant differences in the intergroup conflict experienced by subsidiaries pursuing different international strategies. However, effectiveness of the headquarters‐subsidiary relationship was negatively related to intergroup conflict. The use of the avoiding style of conflict management was negatively related to the effectiveness of the headquarters‐subsidiary relationship, as hypothesized. For MNCs pursuing global integration strategies, the use of personal integrating mechanisms and integrating conflict management styles were negatively related to intergroup conflict. For MNCs pursuing local responsiveness strategies, the use of bureaucratic integrating mechanisms and dominating conflict management styles were not negatively related to inter‐group conflict. This ran counter to expectations. MNCs pursuing multi‐focal strategies did not fit neatly into either strategy camp—global integration or local responsiveness.

Details

International Journal of Conflict Management, vol. 4 no. 2
Type: Research Article
ISSN: 1044-4068

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Article
Publication date: 10 October 2016

Anders Pehrsson

Drawing on the contingency perspective of strategy, the purpose of this paper is to extend current understanding of fit between a differentiation strategy of the…

Abstract

Purpose

Drawing on the contingency perspective of strategy, the purpose of this paper is to extend current understanding of fit between a differentiation strategy of the industrial firm’s foreign subsidiary and key contextual boundaries.

Design/methodology/approach

A conceptual framework is developed in which a differentiation strategy involves the complementary approaches of innovativeness and customer responsiveness. The key boundaries consist of local competitive dynamics and the value-adding mandate assigned to the subsidiary. Detailed features of four types of differentiation strategies are identified by analysing strategies applied by subsidiaries of industrial firms operating on the US market.

Findings

Four propositions are developed regarding alignment between strategy types and the boundaries. Relationships are proposed regarding a strategy type and a context specified by rivalry/relational competitive dynamics, and a broad/narrow value-adding mandate.

Research limitations/implications

The conceptual framework and the propositions may be tested by analysing statistical data on industrial firms’ subsidiaries operating in several host countries.

Practical implications

To increase a foreign subsidiary’s contribution to the global competitiveness of an industrial firm, an awareness of the boundaries to the subsidiary’s strategy of differentiation that may hamper the subsidiary’s performance is essential.

Originality/value

The conceptual framework, and the propositions, contributes to literature on the industrial firm’s global strategy because it focuses on subsidiary strategy and extends present understanding of the mechanisms that drive the effectiveness of a foreign subsidiary’s differentiation strategy.

Details

European Business Review, vol. 28 no. 6
Type: Research Article
ISSN: 0955-534X

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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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Book part
Publication date: 10 August 2016

Marty Reilly and Pamela Sharkey Scott

Increased global competition originating from both within the multinational corporation (MNC) and from global adversaries dictates that subsidiaries must be responsive to…

Abstract

Increased global competition originating from both within the multinational corporation (MNC) and from global adversaries dictates that subsidiaries must be responsive to change, adaptable, and capable of sensing and seizing new opportunities for capability development and growth. For many subsidiaries adhering to, or being seen to adhere to, the wider organizational goals dictated by their parent represents an additional complexity. While it may be necessary to divert slack resources towards capability development, subsidiaries which do so, on their own initiative, may well run the risk of being categorized as an unruly node in the MNC’s network. Further, by failing to show compliance with organizational strategy future subsidiary-driven efforts may be curbed or prohibited.

The need to demonstrate value to the MNC through developing new and novel capabilities while complying with parent-driven strategy thus represents a key subsidiary dilemma, yet remains an underexplored phenomenon in international business research. Framing this dilemma via an ambidexterity lens, our chapter explores how five subsidiary units balance and negotiate allegiances within a modern MNC context. We find that in the subsidiary context aligning and adapting may not be competing or exclusive strategies, but in effect two sides of the same coin. The structural context can shape relative levels of alignment via controlling mechanisms and monitoring of operations while the subsidiary’s behavioral context, idiosyncratic to the subsidiary, can dictate its capacity to generate initiatives and to create new and novel capabilities for diffusion across the MNC network.

Details

Perspectives on Headquarters-subsidiary Relationships in the Contemporary MNC
Type: Book
ISBN: 978-1-78635-370-2

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Article
Publication date: 15 October 2020

Chaturong Napathorn

This paper aims to contribute to the literature on global talent management by examining how multinational corporations (MNCs) from developed and emerging economies manage…

Abstract

Purpose

This paper aims to contribute to the literature on global talent management by examining how multinational corporations (MNCs) from developed and emerging economies manage talented employees in other emerging economies. Specifically, it aims to understand why MNCs from developed economies are likely to face lower levels of challenge than MNCs from emerging economies when translating corporate-level talent management strategies to their subsidiaries located in emerging economies and how local contextual factors influence the translation processes.

Design/methodology/approach

This paper undertakes a matched-case comparison of two MNCs, one from a developed economy and the other from an emerging economy, that operate in the emerging economy of Thailand. Evidence was obtained from semi-structured interviews field visits and a review of archival documents and Web resources.

Findings

Based on the obtained evidence, this paper proposes that MNCs from developed economies tend to face challenges in terms of skill shortages, and these challenges affect their translation of talent management strategies to the subsidiary level. By contrast, MNCs from emerging economies tend to face challenges in terms of both skill shortages and the liability of origin (LOR) (i.e. weak employer branding) in the translation process. Both groups of MNCs are likely to develop talent management practices at the subsidiary level to address the challenge of successfully competing in the context of emerging economies.

Research limitations/implications

One limitation of this research is its methodology. Because this research is based on a matched-case comparison of an MNC from a developed economy and an MNC from an emerging economy, both of which operate in the emerging economy of Thailand, it does not claim generalizability to all MNCs and to other emerging economies. Rather, the results of this research should lead to further discussion of how MNCs from developed and emerging economies translate corporate-level talent management strategies into subsidiary-level practices to survive in other emerging economies. However, one important issue here is that there may be a tension between the use of expatriates and local top managers at MNCs’ subsidiaries located in other emerging economies as drivers for knowledge sourcing in that the importance of expatriates may diminish over time as the subsidiaries located in those economies age (Dahms, 2019). In this regard, future research in the area of global talent management should pay special attention to this issue. The other important issue here is that it is possible that the two case study MNCs are very different from one another because of their organizational development stage, history and current globalization stage. Thus, this issue may also influence the types of talent management strategies and practices that the two case study MNCs have developed in different countries. In particular, MNCs from emerging economies (ICBC) may not have developed their global HR strategies, as they have not yet operated globally as in the case of MNCs from developed economies (Citibank). This can be another important issue for future research. Additionally, both MNCs examined in this research operate in the banking industry. This study, therefore, omits MNCs that operate in other industries such as the automobile industry and the hotel and resort industry. Future researchers can explore how both groups of MNCs in other industries translate their talent management strategies into practices when they operate in other emerging economies. Moreover, this study focuses only on two primary contextual factors, the skill-shortage problem and LOR; future research can explore other local contextual factors, such as the national culture, and their impact on the translation of talent management strategies into practices. Furthermore, quantitative studies that use large sample sizes of both groups of MNCs across industries might be useful in deepening our understanding of talent management. Finally, a comparison of talent management strategies and practices between Japanese MNCs and European MNCs that operate in Thailand would also be interesting.

Practical implications

The HR professionals and managers of MNCs that operate in emerging economies or of companies that aim to internationalize their business to emerging economies must pay attention to local institutional structures, including national skill formation systems, to successfully implement talent management practices in emerging economies. Additionally, in the case of MNCs from emerging economies, HR professionals and managers must understand the concept of LOR and look for ways to alleviate this problem to ensure the success of talent management in both developed economies and other emerging economies.

Social implications

This paper provides policy implications for the government in Thailand and in other emerging economies where the skill-shortage problem is particularly severe. Specifically, these governments should pay attention to solving the problem of occupation-level skill shortages to alleviate the severe competition for talented candidates among firms in the labor market.

Originality/value

This paper contributes to the prior literature on talent management in several ways. First, this paper is among the first empirical, qualitative papers that aim to extend the literature on global talent management by focusing on how MNCs from different groups of countries (i.e. developed economies and emerging economies) manage talented employees in the emerging economy of Thailand. Second, this paper demonstrates that the institutional structures of emerging economies play an important role in shaping the talent management practices adopted by the subsidiaries of MNCs that operate in these countries. In this regard, comparative institutionalism theory helps explain the importance of recognizing institutional structures in emerging economies for the purpose of developing effective talent management practices. Finally, there is scarce research on talent management in the underresearched country of Thailand. This study should, therefore, assist managers who wish to implement corporate-to-subsidiary translation strategies in Thailand and other emerging economies.

Details

Review of International Business and Strategy, vol. 30 no. 4
Type: Research Article
ISSN: 2059-6014

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Article
Publication date: 24 April 2009

Anders Pehrsson

The purpose of this paper is to extend the knowledge of marketing strategy antecedents of industrial value adding in foreign markets. It attempts to answer the following…

Abstract

Purpose

The purpose of this paper is to extend the knowledge of marketing strategy antecedents of industrial value adding in foreign markets. It attempts to answer the following two questions: how is the marketing strategy of a foreign subsidiary associated with the extent of its value‐adding activity? Is there an association between the extent of value‐adding activity and financial performance of the subsidiary?

Design/methodology/approach

A model is developed and hypotheses are tested. Data are collected from 191 subsidiaries of Swedish manufacturing firms in Germany, the UK, and the USA.

Findings

Product‐market breadth and market experience positively affect the extent of foreign value adding. Also, market experience has a moderating effect and strengthens the positive association between product‐market breadth and the extent of value adding. A foreign subsidiary's financial performance is positively associated with the number of value‐adding activities of the subsidiary.

Research limitations/implications

The study shows that the marketing strategy of a foreign subsidiary needs to be acknowledged to understand the antecedents of foreign value‐adding activity. In addition, the extent of value‐adding activity contributes to the implementation of an effective international strategy.

Practical implications

An industrial firm wanting to implement an effective international marketing strategy needs to pay attention to the links between the marketing strategy of a foreign subsidiary and the extent of the subsidiary's value‐adding activity.

Originality/value

The study is unique in that it applies a subsidiary perspective and focuses on foreign subsidiary strategy associations. The study both extends the common approach, which argues that the value adding of a foreign subsidiary is determined only by the corporate marketing strategy, and explores associations with foreign subsidiary performance.

Details

International Marketing Review, vol. 26 no. 2
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 11 February 2019

Sunil Venaik and David F. Midgley

This paper aims to identify the archetypes of marketing mix standardization-adaptation in MNC subsidiaries and to examine the relationships between MNC subsidiary strategy

Abstract

Purpose

This paper aims to identify the archetypes of marketing mix standardization-adaptation in MNC subsidiaries and to examine the relationships between MNC subsidiary strategy, environment and performance through the theoretical lenses of fit and equifinality.

Design/methodology/approach

The authors use a mail survey to collect data from MNC subsidiary business units located in multiple countries. They apply a novel archetypal analysis method to identify the diverse archetypes of marketing mix standardization-adaptation in MNC subsidiaries. Finally, through cross-tabulation and regression analysis, they examine the relationships between MNC strategy, environment and performance.

Findings

They identify four archetypes of MNC subsidiary standardization-adaptation including a new archetype that is not recognized in the literature. This analysis finds partial support for both fit and equifinality, suggesting complementarity between the two theories.

Research limitations/implications

The study could be extended with longitudinal data to examine the dynamics in MNC marketing mix strategy and performance in response to the changing business environment.

Practical implications

The findings suggest that MNC subsidiary managers could deploy a broader set of international marketing strategy configurations than those currently prescribed to enhance performance.

Originality/value

The authors use a novel configuration-based archetypal analysis method and extend the theoretical typology of international marketing strategies pursued by MNC subsidiaries. The partial support for both fit and equifinality expands the theoretical lens through which we can examine the relationships between MNC marketing strategy, environment and performance.

Details

European Journal of Marketing, vol. 53 no. 2
Type: Research Article
ISSN: 0309-0566

Keywords

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