Subsidiary strategy and importance of standards: An institutional development of the integration-responsiveness framework

Abstract

According to the integration–responsiveness framework, subsidiaries of multinational enterprises (MNEs) are assigned different strategic roles depending on the business environments they operate in. MNEs are classified as multinational, international, transnational, and global firms. Although standards are crucial for both export performance and Foreign Direct Investment, there is no scientific knowledge on how different types of standards interrelate with MNE strategies. Derived from the review of the limited literature on the role of different types of standards for different MNEs subsidiary strategies, we take an institutional theory perspective and position different types of standards within the integration–responsiveness framework. Based on data collected within the German Standardization Panel, cluster analysis is performed confirming that MNEs’ subsidiary strategies can be grouped according to the importance of formal and company standards. While conformity with national formal standards is necessary to meet pressure for local responsiveness, the application of international standards provides firms with access to global markets. Company standards and management system standards are important to transnational firms to achieve efficiency gains and improve bargaining positions. We compare the export intensity of MNEs with different subsidiary strategies to validate our clustering. In addition, different motives for applying different types of standards confirm our conceptual positioning.