Abstract
Multinational enterprise (MNE) subsidiaries abroad are important organizations in their own rights. They typically hold some of the MNE’s most critical resources, and operate at the forefront of complex international environments. In this review, we identify and organize theoretical and empirical research on subsidiary management based on over 600 articles in leading academic journals. We develop a conceptual framework that integrates complementary streams of theoretical and empirical research with the subsidiary as its focal unit of analysis. In particular, we review six lines of research on subsidiary scope, practices, knowledge management, engagement with local market and nonmarket actors, performance, and individuals within subsidiaries. We highlight theoretical perspectives that have contributed to, and been advanced by, research on MNE subsidiaries. Based on the review, we explore future research agendas, linking the contemporary research themes with two main thrusts. First, subsidiary management is a multi-level phenomenon that would benefit from more microfoundational research. Second, subsidiary management operates at key interfaces of technology paradigm shifts, and of disruptions in the political and institutional environment. Research into the dynamics of subsidiary management would thus enhance our understanding of international business in a volatile global economy.
Highlights
Subsidiaries of multinational enterprises (MNEs) are at the forefront of many international business challenges as they operate in complex international environments and control some of the firmspecific advantages (FSAs) of the Multinational enterprise (MNE) (Rugman & Verbeke, 1992; Rugman, Verbeke, & Nguyen, 2011)
We have reviewed the international business (IB) literature to explore what scholarly insights recent research can offer to those with responsibilities in subsidiary management
We found that IB scholars has been very engaged in subsidiary management-related questions
Summary
Subsidiaries of multinational enterprises (MNEs) are at the forefront of many international business challenges as they operate in complex international environments and control some of the firmspecific advantages (FSAs) of the MNE (Rugman & Verbeke, 1992; Rugman, Verbeke, & Nguyen, 2011). The management of subsidiaries presents major managerial challenges and provides a foundation for the evolution of the MNE itself. We seek to build a foundation for future scholarship by integrating six lines of research to strengthen theory development relevant to the management of subsidiaries. We follow Birkinshaw, Hood, & Jonsson (1998: 224) and define an MNE subsidiary ‘‘as any operational unit controlled by the MNE and situated outside the home country. There will be a single subsidiary in the host country; in other cases, there will be several.’’1 The management of MNE subsidiaries, refers to the managerial activities related to the development and implementation of subsidiary strategies and operations that involve the creation and utilization of resources to enhance subsidiary performance. Our overarching question is: ‘‘How do subsidiaries, and key actors within the subsidiaries, manage subsidiary strategies and operations?’’
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