The determinants of MNC subsidiary initiatives: implications for small business

Abstract

Since the importance of the subsidiary's role continues to increase, a growing number of studies have focused on MNC subsidiary strategies. The aim of this study is to explore the determinants of a subsidiary's initiative. Based on the subsidiary research's classification provided by Birkinshaw and Hood, an integrated framework is developed to examine the influences of three groups of variables on the subsidiary initiative, namely, the headquarters-subsidiary relationship, the subsidiary resources and the network characteristics of the subsidiary. Since previous studies have focused on subsidiary initiatives in developed countries, this study addresses the issue of MNC subsidiaries in developing countries. The present analysis of 67 European, US and Japanese MNC subsidiaries in Taiwan reveals that each of the three groups of variables influences the subsidiary initiative. Furthermore, in terms of individual variables, it is determined that procedural justice, a subsidiary's relative capabilities, and a subsidiary's local responsiveness all have a positive influence on the subsidiary initiative. Finally, because innovation is critical to small business's global strategy, this study discusses the implications of subsidiary initiatives for global strategy of small business and indicates potential directions for future research.

Autonomy and procedural justice in strategic systems planning

“…The derivation of the scales from past research and their use in other studies support their content validity (Kim & Mauborgne, 1991; 1993a,b; 1996; Raghunathan & Raghunathan, 1994; Taggart, 1997; Papke‐Shields et al ., 2002; 2006; Newkirk et al ., 2003; Wang & Tai, 2003; Tseng et al ., 2004). Their pilot testing does likewise.…”

“…Initial research (Kim & Mauborgne, 1991; 1993a,b; 1996) used Cronbach's alpha to establish convergent validity, and used low correlations with other constructs to establish discriminant validity for the procedural justice items. Later research (Taggart, 1997; Tseng et al ., 2004) applied the similar techniques to revalidate the items.…”

“…Individually, these components had been applied in prior management research (Leventhal, 1980; Greenberg, 1986; Bies & Shapiro, 1987; Folger & Konovski, 1989). They have since been operationalised as a group to represent procedural justice in empirical research in multinational firms (Kim & Mauborgne, 1993a,b; 1996; Tseng et al ., 2004), and also recommended elsewhere for such use (Ellis, 2000; Rugman & Verbeke, 2001). The characteristics, derived from Kim & Mauborgne (1993a,b; 1996), appear in Table 2.…”

Roles of foreign‐owned subsidiaries in a European peripheral economy

“…Using the constructs of A and PJ as a meaningful way to classify subsidiaries, four distinctive roles (''partner,'' ''militant,'' ''collaborator'' and ''vassal'') have been identified. The A-PJ framework was empirically tested and verified by Taggart (2001) and Tseng et al (2004).…”

Towards Innovation in Multinational Corporation Subsidiaries: Development of an Instrument to Select and Evaluate Value Driven Strategies

“…Progression through each of these stages demands that the subsidiary consciously and proactively develop a strategy to add value. Some of these strategies include value chain migration (Fennelly and Cormican, 2006), initiative taking (Birkinshaw and Fry, 1998;Delany, 2000;Tseng et al, 2004), courting headquarters attention (Birkinshaw et al, 2006;Bouquet and Birkinshaw, 2008b), embedding itself within the multinational company (Heidenreich, 2012), gaining autonomy from headquarters (Paterson and Brock, 2002), and subsidiary entrepreneurship (Birkinshaw, 1997;Scott et al, 2010).…”