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Accounting for the strengths of MNC subsidiaries: the case of foreign-owned firms in Denmark

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  • Forsgren, Mats
  • Pedersen, Torben
  • Foss, Nicolai J.

Abstract

This paper links up with recent work on the role of subsidiaries in multinational corporations as well as with recent work in the strategy and business network literature. We discuss the sources of organizational strengths of subsidiaries in the larger multinational corporation, and argue that organizational strength can to some extent be proxied by strength in the market place. Based on analysis of data on foreign-owned production firms in Denmark, we test three hypotheses: 1) that internal factors (capabilities, patents....) are positively related to the organizational strengths of MNC subsidiaries, 2) business network factors (network relations) are positively related to the organizational strengths of MNC subsidiaries, and 3) there is an interaction effect between internal factors and business network factors when explaining the organizational strengths of MNC subsidiaries. Hypothesis 1 but not Hypothesis 2 is supported. But the testing also supports Hypothesis 3, that is there seems to be an interaction effect between the two factors.

Suggested Citation

  • Forsgren, Mats & Pedersen, Torben & Foss, Nicolai J., 1999. "Accounting for the strengths of MNC subsidiaries: the case of foreign-owned firms in Denmark," International Business Review, Elsevier, vol. 8(2), pages 181-196, April.
  • Handle: RePEc:eee:iburev:v:8:y:1999:i:2:p:181-196
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    References listed on IDEAS

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    1. Julian Birkinshaw, 1996. "How Multinational Subsidiary Mandates are Gained and Lost," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(3), pages 467-495, September.
    2. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    3. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    4. David J. Teece, 2003. "Towards an Economic Theory of the Multiproduct Firm," World Scientific Book Chapters,in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 15, pages 419-446 World Scientific Publishing Co. Pte. Ltd..
    5. Gupta, Anil K. & Govindarajan, V., 1994. "Organizing for knowledge flows within MNCs," International Business Review, Elsevier, vol. 3(4), pages 443-457, December.
    6. Kendall Roth & Allen J Morrison, 1992. "Implementing Global Strategy: Characteristics of Global Subsidiary Mandates," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(4), pages 715-735, December.
    7. Foss, Nicolai Juul, 1993. "Theories of the Firm: Contractual and Competence Perspectives," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 127-144, May.
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    Citations

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    Cited by:

    1. Young, Stephen & Tavares, Ana Teresa, 2004. "Centralization and autonomy: back to the future," International Business Review, Elsevier, vol. 13(2), pages 215-237, April.
    2. Yamin, Mo. & Otto, Juliet, 2004. "Patterns of knowledge flows and MNE innovative performance," Journal of International Management, Elsevier, vol. 10(2), pages 239-258.
    3. Najafi-Tavani, Zhaleh & Giroud, Axèle & Andersson, Ulf, 2014. "The interplay of networking activities and internal knowledge actions for subsidiary influence within MNCs," Journal of World Business, Elsevier, vol. 49(1), pages 122-131.
    4. Foss, Nicolai J. & Pedersen, Torben, 2002. "Transferring knowledge in MNCs: The role of sources of subsidiary knowledge and organizational context," Journal of International Management, Elsevier, vol. 8(1), pages 49-67.
    5. Scott-Kennel, Joanna & Enderwick, Peter, 2004. "Inter-firm alliance and network relationships and the eclectic paradigm of international production: an exploratory analysis of quasi-internalisation at the subsidiary level," International Business Review, Elsevier, vol. 13(4), pages 425-445, August.
    6. Drogendijk, H.J., 2001. "Expansion patterns of Dutch firms in Central and Eastern Europe : Learning to internationalize," Other publications TiSEM 18571cef-0dd0-46ff-82aa-3, Tilburg University, School of Economics and Management.
    7. Buckley, Peter J. & Carter, Martin J., 2002. "Process and structure in knowledge management practices of British and US multinational enterprises," Journal of International Management, Elsevier, vol. 8(1), pages 29-48.
    8. Becker-Ritterspach, Florian A.A., 2006. "The social constitution of knowledge integration in MNEs: A theoretical framework," Journal of International Management, Elsevier, vol. 12(3), pages 358-377, September.
    9. Tseng, C. -H. & Yu, C-M. J. & Seetoo, D. H. W., 2002. "The relationships between types of network organization and adoption of management mechanisms: an empirical study of knowledge transactions of MNC's subsidiaries in Taiwan," International Business Review, Elsevier, vol. 11(2), pages 211-230, April.
    10. Guest Editors & Ana Teresa Tavares & Stephen Young, 2005. "FDI and multinationals: patterns, impacts and policies," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 3-16.
    11. repec:eee:iburev:v:26:y:2017:i:6:p:1168-1183 is not listed on IDEAS
    12. repec:bla:acctfi:v:56:y:2016:i:4:p:1041-1070 is not listed on IDEAS
    13. Andersson, Ulf & Forsgren, Mats & Pedersen, Torben, 2001. "Subsidiary performance in multinational corporations: the importance of technology embeddedness," International Business Review, Elsevier, vol. 10(1), pages 3-23, February.
    14. Yamin, Mohammad & Forsgren, Mats, 2006. "Hymer's analysis of the multinational organization: Power retention and the demise of the federative MNE," International Business Review, Elsevier, vol. 15(2), pages 166-179, April.
    15. repec:spr:manint:v:54:y:2014:i:5:d:10.1007_s11575-013-0191-2 is not listed on IDEAS
    16. Andersson, Ulf & Forsgren, Mats & Pedersen, Torben, 1999. "The Mnc As A Differentiated Network: Subsidiary Technology Embeddedness And Performance," Working Papers 3-1999, Copenhagen Business School, Department of International Economics and Management.

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