Abstract
ABSTRACTThis study provides new insights into the role of subsidiary managers in the practice of global business models of multinational enterprises in transforming economies. Drawing on the global business model literature and through semi-structured interviews with a leading Norwegian maritime multinational enterprise in China, we have developed and critically explored a theoretical framework for uncovering how subsidiary managers understand and manage the tensions between the headquarters based in a western country and the subsidiaries based in a transforming economy. More specifically, when implementing the global business model in the transforming economy, subsidiary managers need to undertake effective management of structural, behavioural, and cultural tensions along with the global integration-local responsiveness dilemma. Subsidiary managers can contribute to solving structural tensions between the headquarters and subsidiary by undertaking effective market sensing and knowledge transfer activities to integrate the transforming economies into the MNE's global production networks. Meanwhile, they need to make effective relationship management to solve behavioural and cultural tensions.
Highlights
International business scholars have intensified calls to critically examine business model innovation in transforming economies (Volberda, Van den Bosch, & Heij, 2017)
When MNEs implement their global business models in transforming economies, different types of tensions can arise between the headquarters and subsidiaries, which need to be overcome to ensure that their products, services, and delivery mechanisms can be adapted to the needs of local conditions
Our emergent framework complements the existing literature on global business models of MNEs (e.g., Baden-Fuller & Haefliger, 2013; Tallman et al, 2018) by addressing how MNEs operating in transforming economies can achieve local responsiveness by ensuring that subsidiary managers understand how to manage the tensions associated with the implementation of global business model
Summary
International business scholars have intensified calls to critically examine business model innovation in transforming economies (Volberda, Van den Bosch, & Heij, 2017). Subsidiary managers carry into the MNE’s network perceptual and decision-making abilities to construct boundaries between headquarters and customers/partners in the transforming economy (Wei, Samiee, & Lee, 2014). They contribute to translating, adapting, and acting on the MNE’s global business model in contextually appropriate ways as well as enrolling actors in the global business network in ways that shape and make the markets (Lunnan & McGaughey, 2019; Mason & Spring, 2011). We address a key research question in this article: How do subsidiary managers of an MNE manage tensions between headquarters and subsidiaries when implementing the global business model in the transforming economy?
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