The microfoundations of subsidiary initiatives: How subsidiary manager activities unlock entrepreneurship

Abstract

Research Summary: We use a microfoundations lens to challenge the assumption of a simple relationship between organizational‐level context (subsidiary entrepreneurial orientation) and entrepreneurial outcomes (initiative realization). Drawing on middle manager and subsidiary literature, we argue that the strategic activities of the subsidiary's central actor, the subsidiary CEO (referred to as the subsidiary manager), translates the benefits of subsidiary entrepreneurship for initiative realization. We test this mediating effect of subsidiary manager micro‐level activities on data from 186 individuals. The results of our multilevel mediation analysis show that micro‐activities of subsidiary managers mobilize subsidiary entrepreneurship for initiative realization, “downward” through facilitating subsidiary adaptability and “horizontally” through enabling embeddedness in the local environment. Our findings also challenge the accepted value of “upward” championing alternatives. Revealing the centrality of subsidiary manager activities for unlocking entrepreneurship demonstrates the value of adopting a microfoundations lens for understanding organizational phenomena. Managerial Summary: Multinational companies (MNCs) increasingly expect their subsidiary units to contribute through realizing initiatives, such as new product, service, or process designs. Such outcomes are encouraged through a supporting organizational context for entrepreneurship. But to understand how an entrepreneurial context translates into realized initiatives demands that we apply a microfoundations lens and consider the activities of the subsidiary's central actor, the subsidiary chief executive officer—referred to as the “subsidiary manager.” The subsidiary manager is responsible for mobilizing the subsidiary to develop relationships to access the knowledge, ideas, and opportunities implicit in the initiative process. Revealing the impact of these micro‐activities advances our understanding of how to liberate the benefits of entrepreneurship for realizing initiatives. This study offers key insights for both subsidiary managers and headquarters.

Sowing the seeds of subsidiary influence: Social navigating and political maneuvering of subsidiary actors

“…The significant shift from a hierarchical to a networked MNE has challenged how the subsidiary manages its changing relationship with corporate HQ and has created a “high stakes” political contestation in the struggle to develop and maintain influence (Egelhoff & Wolf, ; Levy & Reiche, ). Despite calls to explore how the subsidiary can cultivate greater influence in this context, extant research has largely failed to address the ongoing microlevel interactions that take place on a daily basis between key actors at the corporate HQ‐subsidiary interface (Geppert & Dorrenbacher, ; O'Brien et al, ; Pla‐Barber et al, ). By exploring how subsidiary actors use their social and political skills to augment and enrich subsidiary influence in the context of mandate change, our study makes two important theoretical contributions.…”

“…Representative Quotations FIGURE 1 Continued daily basis between key actors at the corporate HQ-subsidiary interface (Geppert & Dorrenbacher, 2014;O'Brien et al, 2018;Pla-Barber et al, 2017). By exploring how subsidiary actors use their social and political skills to augment and enrich subsidiary influence in the context of mandate change, our study makes two important theoretical contributions.…”

“…These insights also address shortcomings in considering the negative aspects of using political skill (Zettler & Lang, 2015) and how the politicizing process affects the subsidiary's mandate (Birkinshaw & Ridderstrale, 1999). Further work is needed on how the disaggregation of corporate HQ responsibilities to key subsidiary actors may impact the overall structure of the MNE and create further complexity in maintaining subsidiary influence (Levy & Reiche, 2017;O'Brien et al, 2018;Pla-Barber et al, 2017).…”

“…More specifically, MNEs are populated by individual actors who have diverse political objectives formed through a multitude of social interactions (Harvey & Novicevic, 2004;Kostova & Roth, 2003;Morgan & Kristensen, 2006). In this sense, the concept of subsidiary influence has remained largely "faceless" in explaining how significant transitional exchanges in the corporate HQsubsidiary relationship represent a global political game dominated by ongoing microlevel interactions from key actors at the subsidiary level (Forsgren et al, 2005;Kristensen & Zeitlin, 2005; O'Brien, Sharkey Scott, Andersson, Ambos, & Fu, 2018). In particular, shifting structures in the form of mandate change create "contested social spaces" within the MNE, leading to increasingly intense social and political interactions between powerful actors seeking to establish greater influence (Dorrenbacher & Gammelgaard, 2016;Geppert & Dorrenbacher, 2014).…”

Managing interrelated tensions in headquarters–subsidiary relationships: The case of a multinational hybrid organization

“…While not all the tensions between local integration and global responsiveness are paradoxical, most of them manifest in the interaction between HQ and subsidiaries. For example, such tensions exist in the areas of autonomy and control (Beugelsdijk & Jindra, 2018;Friesl & Silberzahn, 2017), knowledge creation and sharing (Hensmans & Liu, 2018;Mudambi & Navarra, 2004), connectedness and isolation (Asakawa, 2001;Monteiro, Arvidsson, & Birkinshaw, 2008), initiative-taking and conformity (Decreton, Nell, & Stea, 2019;O'Brien, Sharkey Scott, Andersson, Ambos, & Fu, 2019), or internal and external embeddedness (Andersson & Forsgren, 1996;Schotter, Mudambi, Doz, & Gaur, 2017).…”