Building firm-specific advantages in multinational corporations: the role of subsidiary initiative

Abstract

A central theme of much of the recent literature on the strategy of the multinational corporation (MNC) is the increasingly important role played by subsidiary companies as contributors to the development of firm-specific advantages. Traditional academic models that viewed subsidiaries as either ‘market access’ providers or as recipients of the parent company’s technology transfers (Vernon, 1966) gave way in the 1980s to richer conceptualizations in which subsidiaries tapped into leading-edge ideas, undertook important research and development work, and became active participants in the formulation and implementation of strategy (Bartlett and Ghoshal, 1986; Hedlund, 1986; Gupta and Govindarajan, 1994). The generation of firm-specific advantages, correspondingly, shifted from being the sole concern of the parent company to a collective responsibility for the corporate network.