Sister Subsidiaries Research Articles

The decay of location advantages and the substitutive role of firm-specific advantages in technology-based manufacturing

PurposeThis research aims to provide a new perspective on the evolving linkages between LAs and FSAs in the context of the technology-based manufacturing industry. Firm-level competitive strengths in an international context build upon the combination of (largely) exogenous location advantages (LAs) and endogenous firm-specific advantages (FSAs). The authors focus especially on the decay of LAs over time, which has been observed in many highly developed countries during the past decades. The authors show how the strengthening of FSAs can substitute for decaying LAs, thereby safeguarding against the demise of entire industrial regions.Design/methodology/approachThe authors examine the technology-based manufacturing industry in Belgium, building upon an analysis of survey responses by 66 firms including a subgroup of 26 multinational enterprise (MNE) subsidiaries. The professional association representing this industry in Belgium (Agoria) viewed the firms included in the survey as representative for Belgian technology-based manufacturing in terms of the LAs they presently build upon (or location disadvantages they face) and the internal strengths they command relative to (foreign) rivals. The investigation uncovered the decay of critical LAs in Belgium and in parallel, the rise of ‘compensating’ FSAs of Belgian operations relative to foreign firms, including, especially, MNE sister subsidiaries in other countries. The authors also conducted 23 in-depth interviews with senior level managers (CEOs and senior vice presidents) of technology-based firms, including 10 subsidiaries of foreign-owned MNEs, which validated our analysis of the interplay between LAs and FSAs.FindingsThe findings reveal that since inception, Belgian manufacturing operations experienced an overall decay in their critical LAs by 23% on average. Despite this, several Belgian subsidiaries of foreign MNEs consider themselves as commanding a resource-base superior to that of the next-best-in-class subsidiaries. Furthermore, when assessing the dynamic interplay between LAs and FSAs, there is some evidence that the decay of LAs fueled the quest for – and firm-level journey toward – stronger FSAs.Originality/valueThe originality of this study is the alternative perspective to the conventionally assumed “positive-positive” relationship between LAs and FSAs. Prior management research has not examined the impact of decaying LAs on new FSA-creation in the realm of technology-based manufacturing.

Multinationals’ intraregional geographic expansion and foreign subsidiary performance

This study investigates how the intraregional geographic expansion of a multinational enterprise (MNE) affects the performance of foreign subsidiaries in the region. While previous studies have primarily focused on the impact of intraregional expansion at the overall MNE level, this study explores its subsidiary-level effect. The non-linear relationship between intraregional geographic expansion and the performance of foreign subsidiaries in the region is examined by adopting a two-stage least squares model for a panel dataset of Japanese MNEs’ investments in three geographic regions. The findings demonstrate a curvilinear relationship between intraregional geographic expansion and the performance of foreign subsidiaries. Furthermore, the effect of intraregional geographic expansion on subsidiary performance depends on the attributes of foreign subsidiaries in the regional network of sister subsidiaries. Specifically, this study demonstrates that geographically isolated and small subsidiaries and those co-owned by local partner firms gain large benefits from intraregional expansion.

Mandate dynamics and the importance of mandate loss for subsidiary evolution

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

The enduring effects of relational attributes on subsidiary evolution after mandate loss

AbstractResearch SummaryWe explore the importance of the relational attributes, trust and commitment, and their association with subsidiary development after mandate loss. We examine how greenfield and acquired subsidiaries, through their interaction with headquarters and sister subsidiaries, develop relational attributes through mutual‐orientated adaption. These relational attributes are subsequently important elements in upholding and developing subsidiary activities despite the loss of a mandate. We trail this process through a longitudinal field study following the evolution of four multinational enterprise (MNE) subsidiaries. We explain how the subsidiaries relational attributes and part of their activities, associated with its mandates, remain even after the loss of a mandate. The study shows how these relational attributes mitigate and compensate for formal mandate loss.Managerial SummarySubsidiaries have been increasingly seen as the locomotive of MNEs value creation. This has coincided with the disaggregation of the MNEs value chain which has had a positive effect on the development of foreign subsidiaries. However, there is now more competition for responsibilities among subsidiaries leading to increased movement of responsibilities and activities between them. We find that the subsidiary managers relationship attributes (trust and commitment) between them, their headquarters and other subsidiaries in the MNE has a mitigating effect on the loss of these responsibilities for the subsidiary. By showing the impact of managerial micro‐activities in the MNE, our study offers insights for subsidiary managers on what they can leverage to pursue subsidiary charter consolidating activities and survival, or charter enhancing activities and growth.

Preserving Corporate-Wide Communities of Practices During Global Disruption

Communities of practices (CoPs) are groups of people with a common area of expertise or professional practice who interact to exchange, share, and learn from one another. CoPs play a crucial role in distinguishing, memorizing, and exchanging novel effective practices within the organization, enabling the organization to improve its performance. In normal circumstances, CoPs rely on channels with high media richness (i.e., personal meetings in informal settings, short- and long-term visits to sister subsidiaries, participation in joint task forces) that transfer tacit knowledge. We demonstrate how it is possible to preserve effective functioning of CoPs using communication channels with lower media richness.

The changing roles of a multinational enterprise's subsidiaries and headquarters in innovation transfer: A network perspective

The aim of this paper is to identify the changing roles of actors involved in successful innovation transfer within a multinational enterprise. This should help in understanding how multinational enterprises are paving the way for performance management and management control in the innovation network. In examining successful innovation transfer, we identify how the internal (HQ, subsidiaries) and external actors contribute to innovation transfer and how this involvement changes over time. For the analysis, we use case studies of four different multinational enterprises and their chosen successful innovation transfer assessed from the perspective of their subsidiaries. In the analysis, we apply the idea of developing, producing and using settings of innovation derived from industrial network analysis. Our study makes a useful contribution to existing literature by shedding more light on the phenomenon of successful innovation transfer and providing a new, dynamic perspective on the roles of internal and external actors of multinational enterprises in this innovation transfer. We identify the changing roles of headquarters and subsidiaries in successful innovation transfer, indicate the importance of sister subsidiaries for this process and the lack of necessity to involve external customers in order to achieve a successful innovation transfer.

Dualne zakorzenienie filii zagranicznych a przewaga konkurencyjna wynikająca z innowacji

1. Achcaoucaou F., Miravitlles P., Leon-Darder F. [2014], Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness, International Business Review, 23 (1): 76–90. Google Scholar

Axalta may be up for sale again, but continues expanding by acquisition

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

The role of university‐industry research centers in embedding foreign subsidiaries: Insights from automotive research and development in Ontario

AbstractRegionally embedded foreign subsidiaries have an advantage over disembedded ones. The ability to draw on local knowledge networks to create differentiating capabilities can enhance the subsidiary's influence within the multinational enterprise. A subsidiary's power is shaped by its control over external resources or skills the parent company depends on to develop new products. These local relationships are then used to bargain for further mandates, sometimes in competition with sister subsidiaries. One way in which foreign subsidiaries can deepen their connections with the local context is by collaborating in their innovative efforts with university‐based collaborative research centers (CRCs). I argue that CRCs are not a panacea when it comes to embedding the subsidiaries of foreign multinational enterprises (MNEs). A review of the literature helps identify the subsidiary‐parent relationship and industry‐academia conflicts of interest as obstacles to the development of productive relationships between subsidiaries and academia. I draw on evidence from three Ontario CRCs, with different scientific focus and stakeholders and analyze how these factors shape their behavior. The study shows that long‐term CRCs‐subsidiary relationships can be challenging to establish. This is because subsidiaries remain tightly controlled by their parent companies and cannot get access to the resources necessary to pursue ambitious innovation projects. It is also challenging for subsidiaries to form long‐term relationships with CRC researchers, who prioritize other goals such as training skilled personnel and continuing their research agenda. CRCs where 1) subsidiaries have a strong bargaining position within the MNE, and 2) academic expertise is aligned with industry needs have a greater chance to contribute to future MNE embeddedness.

US: Sun Chemical – perylene

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Azelis to sell BASF pigments for CASE applications in Turkey

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

TRCC acquires DVM Pigments & Additives

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Lehmann & Voss buys Osthoff Omega

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Germany: Delta Kunststoffe – coloured masterbatches

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Institutional antecedents of subsidiary external embeddedness: Coping with regulatory competitive constraints

We investigate institutional antecedents to subsidiary external embeddedness and relate regulation constraining competition in local service sectors to subsidiary embeddedness with local partners in complementary sectors. Combining research on business networks with arguments derived from transaction cost economics, we argue that subsidiary external embeddedness depends on the extent of transaction costs originating from small numbers bargaining, which regulatory competitive constraints in local service sectors are a source of. Based on this logic, we suggest that low and high levels of regulatory competitive constraints are associated with greater subsidiary external embeddedness. We also suggest that this U-shaped relationship is more pronounced for subsidiaries that are centers of excellence within the multinational enterprise because these subsidiaries heavily depend on the local context as a source of their competitive advantage over their sister subsidiaries.

Roquette Frères buys Sethness, the world's largest caramel colorants producer

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Multistep Knowledge Transfer in Multinational Corporation Networks: When Do Subsidiaries Benefit From Unconnected Sister Alliances?

In this paper, we explore under which conditions subsidiaries of multinational corporations can benefit from the external networks of sister subsidiaries in terms of new knowledge generation. We focus on the phenomenon of unconnected sister alliances—that is, alliances of sister subsidiaries with whom the focal subsidiary lacks a recent history of internal R&D collaboration. Whereas unconnected sister alliances provide knowledge recombination opportunities for the focal subsidiary, realizing them is challenging because of particular knowledge transfer frictions. In this paper, we theorize on how particular conditions (i.e., headquarters proximity, knowledge overlap, size of focal subsidiary’s own alliance network) influence the strength of these frictions, resulting in hypotheses on how these conditions moderate the relationship between the number of unconnected sister alliances and the generation of new knowledge by focal subsidiaries. We rely on a panel data set of 2,258 R&D subsidiaries belonging to 118 firms in the pharmaceutical industry to empirically test our hypotheses. Jointly, our findings enrich our current theoretical understanding of how different types of external linkages and their interactions shape subsidiaries’ generation of new knowledge. We also illuminate the opportunities and challenges that multistep knowledge transfer processes entail.

Indonesia: DIC – phthalocyanine

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Russia: Murmansk – TiO2

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

France: OliKrom – thermo, photo & piezo-chromic pigments

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.