Multinational Subsidiary Development in an Integrated Europe

Abstract

This chapter examines subsidiary development at the interface between two processes, the one corporate, the other governmental. The first relates to the corporate strategies of existing (or emerging) multinational enterprises (MNEs) as they adjust their product, plant and activity focus in Europe towards the evolution of the Single European Market (SEM). This adjustment has been taking place for almost two decades, but has evidently accelerated in the early 1990s. It has occurred in several phases. For most manufacturing companies the plant by market phase has long passed; others are in the process of consolidating resources in regional groupings which can maximise the benefits of lowest cost manufacturing alongside the logistical and marketing opportunities of the SEM. Taking place at the same time as these changes has been the acceleration of mergers, acquisitions, joint ventures and alliances across European Union (EU) country borders as companies adjust their asset mix to the new market environment. These trends are consistent with the expectations of economic integration (Dunning, 1993) and are likely to continue throughout the 1990s.