Foreign direct investment policy, multinationals, and subsidiary entrepreneurship success and failure in post-war Scotland

Abstract

Scotland was a premier destination for American direct investment from the 1940s to the 1970s. Multinationals were attracted by regional policy inducements that sought to develop modernised engineering sectors. This paper examines the evolution of four American-owned manufacturing subsidiaries between the 1940s and 1980s using correspondence between plant managers and policymakers. Reconciling existing Scottish subsidiary literature, success and failure are both documented. Subsidiary entrepreneurial behaviour was displayed in each case, but developmental outcomes were inhibited. Centralised American management exercised power over Scottish plants, including stripping subsidiaries of innovative products that were developed in Scotland. However, corporate product market competitiveness, a subsidiary’s existing strength within a multinational’s global region presence and business governance structures coalesced to condition success and failure. Policymakers must attempt to embed competitive advantages within localised linkages, but their ability to do so is strongly conditioned by the domestic industrial structure’s capacity to respond favourably to these challenges.