Local Heroes, Regional Champions or Global Mandates? Empirical Evidence on the Dynamics of German MNC Subsidiary Roles in Central Europe

Long-term evolution of the subsidiary’s role: a qualitative perspective on a subsidiary located in Poland1

“…The abovementioned information is supplemented by the results of other empirical studies. In particular, foreign subsidiaries located in Poland concentrate more on the downstream end of the value chain (marketing, sales, and customer service) than those located in the Czech Republic and Hungary [Eckert and Rossmeissl, 2007]; they have higher number of relations with local customers than subsidiaries situated in the Slovak Republic, Hungary, and Estonia [Jindra et al, 2009]; and they hold sales responsibilities exceeding the national level (the Central and Eastern European region or even the world) more often than foreign subsidiaries from Hungary and the Czech Republic do [Eckert and Rossmeissl, 2007]. In addition, Eckert and Rossmeissl [2007] found evidence that the number of value chain functions carried out by foreign subsidiaries located in Poland has increased over time.…”

“…However, there is a lack of studies concerning this subject, especially the ones taking a qualitative perspective. Previous influential empirical research on foreign subsidiaries' evolution referring to Poland conducted quantitative analyses and considered foreign subsidiaries located in both Poland and other Central and Eastern European countries [Eckert and Rossmeissl, 2007;Jindra et al, 2009;Filippov and Duysters, 2012]. Their reasons for selecting such a research sample is that the process of these countries' transition to market economies started in the 1990s and the countries have similar practices related to privatization, liberalization, and macroeconomic stabilization [Gabrisch and Hölscher, 2006].…”

“…However, this neglects the perspective of transition economies that have been developing their international relationships rapidly during the last 30 years as a result of the inflow of foreign direct investments (FDIs) and regional integration. Nonetheless, some previous influential empirical research studies on foreign subsidiary roles addressed this gap by considering foreign subsidiaries located in Central and Eastern European countries [Eckert and Rossmeissl, 2007;Jindra et al, 2009;Filippov and Duysters, 2012;Burger et al, 2018]. Although this solution adds to the international dimension of the study, it also carries some drawbacks.…”

Building R&D capability in subsidiaries – conceptualization of a process perspective

“…Whereas subsidiaries gradually and naturally can be expected to evolve from a competenceexploitation role to a competence-creating role (Malnight, 1995), most often, R&D activities are the result of the dynamic interaction of mandates from headquarters, internal subsidiary decision-making and host country characteristics (Birkinshaw and Hood, 2000). Advocating such a subsidiary evolution view, the role of a subsidiary in relation to its R&D activities is therefore not static, but can change and evolve over time through the accumulation of resources and the development of capabilities (Eckert and Rossmeissl, 2007). Further, while local R&D capabilities can to some extent be accumulated and stored as organizational routines over time (Nelson and Winter, 1982), the process is often strongly influenced by subsidiary initiatives, i.e.…”

Barriers to the accomplishment of a subsidiary's strategic role: how location and corporate networks influence subsidiary performance

“…It has been stated that the difference in power between foreign business units relies on profit contribution, distance to heartquarters (HQs) and especially the control of critical linkages (Birkinshaw, 1995;Gammelgaard, 2009;Ghoshal & Bartlett, 1990;Kang & Li, 2009;Marin & Verdier, 2009). By controlling these linkages, subsidiaries can influence the assignment of orders from HQ's and engage in further functional and geographical responsibilities (Birkinshaw, 1996;Cantwell & Mudambi, 2005;Eckert & Rossmeissl, 2007). However if this were absolutely true, subsidiaries' success would be limited to only those few targeting growing markets that were managed solely by expatriates and having control of political and financial sources.…”