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Subsidiary role development: The effect of micro-political headquarters-subsidiary negotiations on the product, market and value-added scope of foreign-owned subsidiaries

  • Dörrenbächer, Christoph
  • Gammelgaard, Jens
Registered author(s):

    This paper focuses on subsidiary role development in terms of changes in the market, product and value-added scope of foreign subsidiaries within multinational corporations (MNC). In its theoretical part, it identifies three interrelated reasons to explain such role changes: (1) subsidiary capabilities, (2) host-country localization advantages and (3) headquarters' realized strategies--that is, headquarters' intended strategies and the outcomes of micro-political headquarter-subsidiary negotiations. Based on the results of interviews with 65 managers in 11 German headquarters and their 13 Hungarian subsidiaries, the paper reveals the interrelated effects of the three factors on subsidiary role development and shows that headquarters' intended strategies are decisive to explain role development in peripheral host countries, though micro-political headquarter-subsidiary negotiations being an integral part of subsidiary role development.

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    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 12 (2006)
    Issue (Month): 3 (September)
    Pages: 266-283

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    Handle: RePEc:eee:intman:v:12:y:2006:i:3:p:266-283
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    1. Julian Birkinshaw, 1996. "How Multinational Subsidiary Mandates are Gained and Lost," Journal of International Business Studies, Palgrave Macmillan, vol. 27(3), pages 467-495, September.
    2. G R G Benito & B Gr�gaard & R Narula, 2003. "Environmental influences on MNE subsidiary roles: economic integration and the Nordic countries," Journal of International Business Studies, Palgrave Macmillan, vol. 34(5), pages 443-456, September.
    3. Kendall Roth & Allen J Morrison, 1992. "Implementing Global Strategy: Characteristics of Global Subsidiary Mandates," Journal of International Business Studies, Palgrave Macmillan, vol. 23(4), pages 715-735, December.
    4. Birkinshaw, Julian & Ridderstråle, Jonas, 1999. "Fighting the corporate immune system: a process study of subsidiary initiatives in multinational corporations," International Business Review, Elsevier, vol. 8(2), pages 149-180, April.
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    6. Birkinshaw, Julian & Hood, Neil & Young, Stephen, 2005. "Subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance," International Business Review, Elsevier, vol. 14(2), pages 227-248, April.
    7. Hood, Neil & Young, Stephen & Lal, David, 1994. "Strategic evolution within Japanese manufacturing plants in Europe: UK evidence," International Business Review, Elsevier, vol. 3(2), pages 97-122, June.
    8. Pearce, Robert, 1999. "The evolution of technology in multinational enterprises: the role of creative subsidiaries," International Business Review, Elsevier, vol. 8(2), pages 125-148, April.
    9. Thomas W Malnight, 1996. "The Transition from Decentralized to Network-Based MNC Structures: An Evolutionary Perspective," Journal of International Business Studies, Palgrave Macmillan, vol. 27(1), pages 43-65, March.
    10. Welch, Catherine & Marschan-Piekkari, Rebecca & Penttinen, Heli & Tahvanainen, Marja, 2002. "Corporate elites as informants in qualitative international business research," International Business Review, Elsevier, vol. 11(5), pages 611-628, October.
    11. Forsgren, Mats, 1990. "Managing the international multi-centre firm: Case studies from Sweden," European Management Journal, Elsevier, vol. 8(2), pages 261-267, June.
    12. Alan M. Rugman & Sheila Douglas, 1986. "The Strategic Management of Multinationals and World Product Mandating," Canadian Public Policy, University of Toronto Press, vol. 12(2), pages 320-328, June.
    13. Ulf Holm & Anders Malmberg & Orjan S–lvell, 2003. "Subsidiary impact on host-country economies--the case of foreign-owned subsidiaries attracting investment into sweden," Journal of Economic Geography, Oxford University Press, vol. 3(4), pages 389-408, October.
    14. Dörrenbächer, Christoph & Gammelgaard, Jens, 2006. "Subsidiary redefinition: Charter loss in a German-owned subsidiary in Hungary," Discussion Papers, Research Unit: Internationalization and Organization SP III 2006-201, Social Science Research Center Berlin (WZB).
    15. Klaus E. Meyer & Enese Lieb-Dóczy, 2003. "Post-Acquisition Restructuring as Evolutionary Process," Journal of Management Studies, Wiley Blackwell, vol. 40(2), pages 459-482, 03.
    16. Julian Birkinshaw & Neil Hood, 2000. "Characteristics of Foreign Subsidiaries in Industry Clusters," Journal of International Business Studies, Palgrave Macmillan, vol. 31(1), pages 141-154, March.
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