Advertisement

Determinants of Functional Responsibilities of Subsidiaries: Empirical Verification

  • Marlena Dzikowska
Chapter

Abstract

The chapter presents results of an empirical study focused on functional responsibilities of 193 subsidiaries operating in the Polish manufacturing industry during 2012–2017. In particular, the chapter describes diversity in terms of market scope and sophistication level of value chain functions encompassing production, assembly, procurement, marketing, internal sales and distribution, external distribution, and R&D. Our results demonstrate that discrepancies among the functional responsibilities of subsidiaries go far beyond what is commonly acknowledged in extant research. Furthermore, changes in subsidiaries’ functional responsibilities are relatively common and have a rather gradual character. The chapter also presents results of the model explaining the level of functional responsibilities in manufacturing, sales, and innovation areas through a subsidiary’s distinct capabilities, initiative, internal and external embeddedness, and supply environment.

Keywords

Functional responsibilities Determinants of subsidiary evolution Subsidiary evolution Distinct capabilities Embeddedness Initiative Subsidiary role MNE 

References

  1. Achcaoucaou, Fariza, Paloma Miravitlles, and Fidel León-Darderb. 2014. Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness. International Business Review 23 (1): 76–90.CrossRefGoogle Scholar
  2. Ambos, Tina C., Ulf Andersson, and Julian M. Birkinshaw. 2010. What are the consequences of initiative-taking in multinational subsidiaries? Journal of International Business Studies 41 (7): 1099–1118.CrossRefGoogle Scholar
  3. Asmussen, Christian G., Torben Pedersen, and Charles Dhanaraj. 2009. Host-country environment and subsidiary competence: Extending the diamond network model. Journal of International Business Studies 40 (1): 42–57.CrossRefGoogle Scholar
  4. Birkinshaw, Julian M., and Allen J. Morrison. 1995. Configurations of strategy and structure in subsidiaries of multinational corporations. Journal of International Business Studies 26 (4): 729–754.CrossRefGoogle Scholar
  5. Birkinshaw, Julian M., and Neil Hood. 1997. An empirical study of development processes in foreign-owned subsidiaries in Canada and Scotland. Management International Review 37 (4): 339–364.Google Scholar
  6. ———. 1998. Multinational subsidiary evolution: Capability and charter change in foreign-owned subsidiary companies. Academy of Management Review 23 (4): 773–795.CrossRefGoogle Scholar
  7. Birkinshaw, Julian M., Neil Hood, and Stefan Jonsson. 1998. Building firm-specific advantages in multinational corporations: The role of subsidiary initiative. Strategic Management Journal 19 (3): 221–242.CrossRefGoogle Scholar
  8. ———. 2005. Subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance. International Business Review 14 (2): 227–248.CrossRefGoogle Scholar
  9. Burger, Anže, Björn Jindra, Philipp Marek, and Matija Rojec. 2018. Functional upgrading and value capture of multinational subsidiaries. Journal of International Management 24 (2): 108–122.CrossRefGoogle Scholar
  10. Cantwell, John, and Ram Mudambi. 2005. MNE competence-creating subsidiary mandates. Strategic Management Journal 26 (12): 1109–1128.CrossRefGoogle Scholar
  11. Chin, Wynne W., and Peter R. Newsted. 1999. Structural equation modelling analysis with small samples using partial least squares. In Statistical strategies for small sample research, ed. Rick H. Hoyle, 307–341. Thousand Oaks: Sage.Google Scholar
  12. Ciabuschi, Francesco, Ulf Holm, and Oscar Martín Martín. 2014. Dual embeddedness, influence and performance of innovating subsidiaries in the multinational corporation. International Business Review 23 (5): 897–909.CrossRefGoogle Scholar
  13. Dörrenbächer, Christoph, and Jens Gammelgaard. 2006. Subsidiary role development: The effect of micro-political headquarters–subsidiary negotiations on the product, market and value-added scope of foreign-owned subsidiaries. Journal of International Management 12 (3): 266–283.CrossRefGoogle Scholar
  14. Dzikowska, Marlena, and Ulf Andersson. 2018. A dynamic framework of subsidiary strategic roles. Paper presented at the annual meeting of the European International Business Academy, Poznań, December 13–15.Google Scholar
  15. Eckert, Stefan, and Frank Rossmeissl. 2007. Local heroes, regional champions or global mandates? Empirical evidence on the dynamics of German MNC subsidiary roles in Central Europe. Journal of East-West Business 13 (2): 191–218.CrossRefGoogle Scholar
  16. Figueiredo, Paulo N. 2011. The role of dual embeddedness in the innovative performance of MNE subsidiaries: Evidence from Brazil. Journal of Management Studies 48 (2): 417–440.CrossRefGoogle Scholar
  17. Filippov, Sergey, and Geert Duysters. 2014. Exploring the drivers and elements of subsidiary evolution in several new EU member states. International Journal of Emerging Markets 9 (1): 120–146.CrossRefGoogle Scholar
  18. Gammelgaard, Jens, Frank McDonald, Andreas Stephan, Heinz Tüselmann, and Christoph Dörrenbächer. 2012. The impact of increases in subsidiary autonomy and network relationships on performance. International Business Review 21 (6): 1158–1172.CrossRefGoogle Scholar
  19. Gaskin, James, Stephen Godfrey, and Alex Vance. 2018. Successful system use: It’s not just who you are, but what you do. AIS Transactions on Human-Computer Interaction 10 (2): 57–81.CrossRefGoogle Scholar
  20. Götz, Oliver, Kerstin Liehr-Gobbers, and Manfred Krafft. 2009. Evaluation of structural equation models using the partial least squares (PLS) approach. In Handbook of partial least squares: Concepts, methods, and applications, ed. Vincezo Esposito Vinzi, Wynne W. Chin, Jörg Henseler, and Huiwen Wang, 691–711. Berlin: Springer.Google Scholar
  21. Hair, Joseph F., William C. Black, Barry J. Babin, Rolph E. Anderson, and Ronald L. Tatham. 2006. Multivariate data analysis. 6th ed. Upper Saddle River: Prentice Hall.Google Scholar
  22. Hair, Joe F., Christian M. Ringle, and Marko Sarstedt. 2011. PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice 19 (2): 139–151.CrossRefGoogle Scholar
  23. Hair, Joseph F., Marko Sarstedt, Torsten M. Pieper, and Christian M. Ringle. 2012. The use of partial least squares structural equation modeling in strategic management research: A review of past practices and recommendations for future applications. Long Range Planning 45 (5–6): 320–340.CrossRefGoogle Scholar
  24. Hair, Joseph F., G. Thomas, M. Hult, Christian M. Ringle, and Marko Sarstedt. 2017. A primer on partial least squares structural equation modeling (PLS-SEM). 2nd ed. Thousand Oaks: Sage.Google Scholar
  25. Henseler, Jörg, Christian M. Ringle, and Rudolf R. Sinkowics. 2009. The use of partial least squares path modeling in international marketing. Advances in International Marketing 20: 277–319.Google Scholar
  26. Henseler, Jörg, Christian M. Ringle, and Marko Sarstedt. 2015. A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science 43 (1): 115–135.CrossRefGoogle Scholar
  27. Hogenbirk, Annelies E., and Hans L. van Kranenburg. 2006. Roles of foreign owned subsidiaries in a small economy. International Business Review 15 (1): 53–67.CrossRefGoogle Scholar
  28. Holm, Ulf, Anders Malmberg, and Örjan Sölvell. 2003. Subsidiary impact on host-country economies—The case of foreign-owned subsidiaries attracting investments into Sweden. Journal of Economic Geography 3 (4): 389–408.CrossRefGoogle Scholar
  29. Hulland, John S. 1999. Use of partial least squares (PLS) in strategic management research: A review of four recent studies. Strategic Management Journal 20 (2): 195–204.CrossRefGoogle Scholar
  30. Kline, Rex B. 2011. Principles and practice of structural equation modeling. New York: Guilford Press.Google Scholar
  31. Kogut, Bruce, and Udo Zander. 1992. Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science 3 (3): 383–397.CrossRefGoogle Scholar
  32. Kottaridi, Constantina, Fragkiskos Filippaios, Marina Papanastassiou, and Robert Pearce. 2004. Choice of location and the roles of foreign subsidiaries: Evidence from UK regions. Reading: Henley Business School University of Reading.Google Scholar
  33. Lohmöller, Jan-Bernd. 1989. Latent variable path modeling with partial least squares. Heidelberg: Physica.CrossRefGoogle Scholar
  34. Marquardt, Donald W. 1970. Generalized inverses, ridge regression, biased linear estimation and non-linear estimation. Technometrics 12 (3): 591–612.CrossRefGoogle Scholar
  35. Meyer, Klaus E., Ram Mudambi, and Rajneesh Narula. 2011. Multinational enterprises and local contexts: The opportunities and challenges of multiple embeddedness. Journal of Management Studies 48 (2): 235–252.CrossRefGoogle Scholar
  36. Mudambi, Ram. 1998. The role of duration in multinational investment strategies. Journal of International Business Studies 29 (2): 239–261.CrossRefGoogle Scholar
  37. Myers, Reymond H. 1990. Classical and modern regression with applications. Boston: Duxbury Press.Google Scholar
  38. Narula, Rajneesh, and John H. Dunning. 2010. Multinational enterprises, development and globalisation: Some clarifications and a research agenda. Oxford Development Studies 38 (3): 263–287.CrossRefGoogle Scholar
  39. Papanastassiou, Marina. 1999. Technology and production strategies of multinational enterprise (MNE) subsidiaries in Europe. International Business Review 8 (2): 213–232.CrossRefGoogle Scholar
  40. Pearce, Robert. 1999. The evolution of technology in multinational enterprises: The role of creative subsidiaries. International Business Review 8 (2): 125–148.CrossRefGoogle Scholar
  41. Podsakoff, Philip M., and Dennis W. Organ. 1986. Self-reports in organizational research: Problems and prospects. Journal of Management 12 (4): 531–544.CrossRefGoogle Scholar
  42. Porter, Michael E. 1985. The competitive advantage: Creating and sustaining superior performance. New York: Free Press.Google Scholar
  43. ———. 1990. The competitive advantage of nations. New York: The Free Press.CrossRefGoogle Scholar
  44. Ringle, Christian M., Marko Sarstedt, and Detmar W. Straub. 2012. A critical look at the use of PLS-SEM in MIS quarterly. MIS Quarterly 36 (1): iii–xiv.CrossRefGoogle Scholar
  45. Rugman, Alan M., and Alain Verbeke. 2001. Subsidiary-specific advantages in multinational enterprises. Strategic Management Journal 22 (3): 237–250.CrossRefGoogle Scholar
  46. Rugman, Alan M., Alain Verbeke, and Wenlong Yuan. 2011. Re-conceptualizing Bartlett and Ghoshal’s classification of national subsidiary roles in the multinational enterprise. Journal of Management Studies 48 (2): 253–277.CrossRefGoogle Scholar
  47. Ryan, Paul, Majella Giblin, Ulf Andersson, and Johanna Clancy. 2018. Subsidiary knowledge creation in co-evolving contexts. International Business Review 27 (5): 915–932.CrossRefGoogle Scholar
  48. Sellin, Norbert. 1989. PLS path version 3.01 application manual. Hamburg: Universitat Hamburg.Google Scholar
  49. Sölvell, Örjan, and Ivo Zander. 1998. International diffusion of knowledge: Isolating mechanisms and the role of the MNE. In The dynamic firm. The role of technology, strategy, organization, and regions, ed. Alfred D. Chandler, Peter Hagstrom, and Örjan Sölvell, 402–417. Oxford: Oxford University Press.Google Scholar
  50. Song, Jaeyong. 2002. Firm capability and technology ladders: Sequential foreign direct investments of Japanese electronics firms in East Asia. Strategic Management Journal 23 (3): 191–201.CrossRefGoogle Scholar
  51. White, Roderick E., and Thomas A. Poynter. 1984. Strategies for foreign-owned subsidiaries in Canada. Business Quarterly 49 (2): 59–69.Google Scholar
  52. WIR. 2002. World investment report. Geneva: UNCTAD.Google Scholar
  53. Wold, Herman O. 1982. Soft modeling: The basic design and some extensions. In Systems under indirect observation: Causality, structure, prediction, ed. Karl G. Jöresborg and Herman O. Wold, vol. 2, 1–54. Amsterdam: North Holland.Google Scholar
  54. ———. 1985. Partial least squares. In Encyclopedia of statistical sciences, ed. Samuel Kotz, N. Balakrishnan, Campbell B. Read, Brani Vidakovic, and Norman L. Johnson, vol. 6, 581–891. New York: Wiley.Google Scholar
  55. Yamin, Mohammad, and Pervez N. Ghauri. 2010. A critical assessment of the business network perspective on HQ control in multinational companies. In Managing the contemporary multinational: The role of headquarters, ed. Ulf Andersson and Ulf Holm, 125–137. Cheltenham: Elgar.Google Scholar
  56. Young, Stephen, Neil Hood, and Ewen Peters. 1994. Multinational enterprises and regional economic development. Regional Studies 28 (7): 657–677.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Marlena Dzikowska
    • 1
  1. 1.Department of International CompetitivenessPoznań University of Economics and BusinessPoznańPoland

Personalised recommendations