Initiatives by Subsidiaries of Multinational Corporations: An Empirical Study on the Influence of Subsidiary Role Context

606 Pages·2018·7.584 MB·English

by  Lars R. Dzedek (auth.)

Lars R. Dzedek
Initiatives by
Subsidiaries
of Multinational
Corporations
An Empirical Study on the
Influence of Subsidiary Role Context
Initiatives by Subsidiaries of Multinational
Corporations
Lars R. Dzedek
Initiatives by Subsidiaries
of Multinational
Corporations
An Empirical Study on the
Influence of Subsidiary Role Context
With a foreword by Prof. Dr. Stefan Schmid
Lars R. Dzedek
Fort Lauderdale, USA
Dissertation ESCP Europe Wirtschaftshochschule Berlin, 2017
Original Title: “Role-Specific Subsidiary Initiative-Taking in Multinational
Corporations – A Contingent and Dynamic Resource-Based Perspective”
ISBN 978-3-658-20949-0 ISBN 978-3-658-20950-6 (eBook)
https://doi.org/10.1007/978-3-658-20950-6
Library of Congress Control Number: 2018932035
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Foreword
For 20 years, the phenomenon of subsidiary initatives has received considerable at-
tention in International Business (IB) and International Management (IM) literature. Whi-
le Julian Birkinshaw’s 1997 article in Strategic Management Journal was certainly brea-
king the ground, many other authors have provided us with valuable and insightful
research on subsidiaries being proactive, risk-taking and autonomous or semi-auto-
nomous.
The present thesis has several merits: First of all, the thesis contains an excellent litera-
ture review on subsidiary initiatives in Multinational Corporations (MNCs). The literature
review fosters our understanding of subsidiariy initiatives, various types of subsidiary
initiatives, their antecedents and consequences. The literature review provides us with
the state-of-the art of the literature, identifies gaps to be closed, and comes up with av-
enues for research to be continued. Second, the thesis links the „subsidiary initative
field“ to the „role typology field“ in IB and IM literature. It is in the empirical part of this
thesis that Lars Dzedek investigates the influence of subsidiary roles on subsidiary initi-
atives. Based on two case study companies, one from the automotive industry, the oth-
er from the telecommunications industry, Lars Dzedek is able to shed light on the sub-
sidiary initiative phenomenon, in particular on the link between the subsidiary role in
question and initative processes and initiative outcomes. Third, the thesis implicitly calls
for future research that is even more processual and longitudinal in nature as well as
moving from the functionalist towards the interpretative paradigm so as to better under-
stand the variety of factors shaping subsidiary initiatives (and their manifold conse-
quences) over time.
The thesis in hand is logically structured, very well-written and easy to read despite its
length. It shifts the view from the typical headquarters-centred MNC towards an MNC in
which subsidiaries can have not only a voice, but can trigger important new develop-
ments. If you are convinced that in MNCs it is not only headquarters, but also subsidia-
ries abroad that matter, you will benefit from the present thesis. You will learn under
which conditions subsidiaries have a greater likelihood to become influential in their pa-
rent companies and their sister subsidiaries as well as in the environment in which they
are embedded. I wish you new and useful insights!

Berlin, November 2017 Stefan Schmid
Preface
This doctoral thesis was initiated during my time at ESCP Europe Wirtschaftshoch-
schule Berlin where I was working as a research assistant at the Chair of International
Management and Strategic Management. Completing this academic endeavor has only
been made possible through the support of many people who I owe much appreciation.
First, I would like to express my deep gratitude to my advisor Prof. Dr. Stefan Schmid
who encouraged and continuously supported this dissertation over the past years. He
gave me the opportunity to choose this highly interesting research topic and promoted
many fruitful discussions, for example, at various research colloquia and international
conferences. His academic rigor, critical guidance and valuable advice have helped to
successfully complete this dissertation.
Second, much appreciation also goes to my second supervisor Prof. Dr. Mark Lehrer
who not only acted as a second reviewer but who also helped to critically shape this
dissertation from its beginning. Thank you so much for many great discussions and va-
luable feedback at research meetings, over lunches or even during long walks together.
An essential part of this dissertation is the empirical study. I am very grateful for the
trust and support from the two multinational firms and the participating managers both at
headquarters and in the many subsidiaries abroad. This research would not have been
possible without their important input on how subsidiary initiatives develop and unfold in
various settings.
I would also like to thank my colleagues from ESCP Europe who supported me in many
ways and of which many have become close friends over the years. They were always
open for discussions, shared ideas and provided moral support when needed. Many
thanks go to Dr. Joern Basel, Prof. Dr. Tobias Dauth, Dr. Ruben Dost, Dr. Holger End-
rös, Dr. Swantje Hartmann, Prof. Dr. Lena Knappert, Dr. Thomas Kotulla, Dr. Max Kury,
Dr. Martina Maletzky, Renate Ramlau, Esther Rödel, Dr. Timo Runge, Carsten Schie-
felbein, Jens Sievert, Dr. Sven Seehausen and Dr. Dennis Wurster.
Most of all I am deeply indebted to my wife Anna-Kathrin for her continuous support,
endless encouragement and great patience. I also sincerely thank my parents, my fa-
mily and close friends for all their help and trust throughout this challenging journey.
Thank you all for helping to make this possible.

Fort Lauderdale, November 2017 Lars R. Dzedek
Brief Contents
1 INTRODUCTION................................................................................................................. 1
1.1 Subsidiary Initiative-Taking in Foreign Subsidiaries ......................................................... 1
1.2 Research Background and Research Questions ............................................................. 2
1.3 Objectives and Structure of the Study .............................................................................. 4
2 REVIEW OF THE LITERATURE ON SUBSIDIARY INITIATIVES ...................................... 9
2.1 Roots of Subsidiary Initiative Research............................................................................ 9
2.2 Findings from the Literature Review and Analysis ......................................................... 10
2.3 Summary of Findings and Implications for Research Project ......................................... 38
3 RESEARCH FRAMEWORK ............................................................................................. 45
3.1 Overview of the Research Framework ........................................................................... 45
3.2 Elements of the Research Framework ........................................................................... 48
3.3 Theoretical Perspectives ............................................................................................... 71
3.4 Contingent and Dynamic Resource-Based Framework ................................................ 151
3.5 Predictions for Role-Specific Initiative-Taking .............................................................. 192
4 EMPIRICAL STUDY ....................................................................................................... 259
4.1 Research Philosophy ................................................................................................... 259
4.2 Research Design ......................................................................................................... 267
4.3 Operationalization of the Research Framework ........................................................... 280
4.4 Collection of Data ........................................................................................................ 313
4.5 Data Analysis............................................................................................................... 323
4.6 Scientific Quality Criteria .............................................................................................. 329
5 EMPIRICAL FINDINGS .................................................................................................. 333
5.1 Company A: Strategic Business Unit Autocomp .......................................................... 333
5.2 Company B: Strategic Business Unit Telecomp ........................................................... 404
5.3 Overview of Findings at Autocomp and Telecomp ....................................................... 469
6 CONTRIBUTIONS, LIMITATIONS AND THE ROAD AHEAD ........................................ 511
6.1 Implications for International Business Research ......................................................... 511
6.2 Implications for Management Practice ......................................................................... 515
6.3 Limitations ................................................................................................................... 520
6.4 Avenues for Further Research ..................................................................................... 523
xi
Contents
1 INTRODUCTION................................................................................................................. 1
1.1 Subsidiary Initiative-Taking in Foreign Subsidiaries ......................................................... 1
1.2 Research Background and Research Questions ............................................................. 2
1.3 Objectives and Structure of the Study .............................................................................. 4
2 REVIEW OF THE LITERATURE ON SUBSIDIARY INITIATIVES ...................................... 9
2.1 Roots of Subsidiary Initiative Research............................................................................ 9
2.2 Findings from the Literature Review and Analysis ......................................................... 10
2.2.1 Overview of the Publication Activity in the Field ...................................................... 10
2.2.2 Framework for the Literature Review and Analysis ................................................. 12
2.2.3 Concept of Subsidiary Initiatives ............................................................................. 13
2.2.3.1 Types of Subsidiary Initiatives ......................................................................... 13
2.2.3.2 Objectives of Subsidiary Initiatives .................................................................. 16
2.2.3.3 Process of Subsidiary Initiatives ...................................................................... 17
2.2.4 Antecedents of Subsidiary Initiatives ...................................................................... 22
2.2.4.1 Environmental Level Context ........................................................................... 22
2.2.4.2 Organizational Level Context ........................................................................... 23
2.2.4.3 Individual Level Context................................................................................... 27
2.2.5 Consequences of Subsidiary Initiatives .................................................................. 29
2.2.5.1 Environmental Level Consequences................................................................ 29
2.2.5.2 Organizational Level Consequences ............................................................... 30
2.2.6 Theoretical Approaches in the Subsidiary Initiative Field ........................................ 32
2.2.7 Research Methodologies in the Subsidiary Initiative Field ...................................... 35
2.3 Summary of Findings and Implications for Research Project ......................................... 38
3 RESEARCH FRAMEWORK ............................................................................................. 45
3.1 Overview of the Research Framework ........................................................................... 45
3.2 Elements of the Research Framework ........................................................................... 48
3.2.1 Subsidiary Role Types ............................................................................................ 48
3.2.1.1 Introduction to Subsidiary Role Typologies ...................................................... 48
3.2.1.2 Subsidiary Role Determination and Development ............................................ 53
3.2.1.3 Subsidiary Roles and Entrepreneurial Behavior ............................................... 56
3.2.1.4 Selection of Subsidiary Role Typologies for the Research ............................... 59
3.2.1.5 Overview of Selected Role Typologies ............................................................ 62
3.2.2 Subsidiary Initiative-Taking Behavior ...................................................................... 67
3.2.2.1 Initiative-Related Resource Management ........................................................ 67
3.2.2.2 Headquarters-Subsidiary Alignment ................................................................ 68
3.2.3 Subsidiary Initiative Outcomes ................................................................................ 69
xii
3.3 Theoretical Perspectives ............................................................................................... 71
3.3.1 Selection of Theoretical Perspectives for the Study ................................................ 72
3.3.1.1 Excluded Theories ........................................................................................... 72
3.3.1.2 Selected Theories ........................................................................................... 83
3.3.2 Resource-Based View of the Firm .......................................................................... 87
3.3.2.1 Overview of the Resource-Based View ........................................................... 87
3.3.2.2 Advancements of the Resource-Based View ................................................... 93
3.3.2.3 Resource-Based View in International Business Literature ............................ 108
3.3.2.4 Resource-Based View in Entrepreneurship Literature ................................... 123
3.3.3 Resource Dependence Theory ............................................................................. 126
3.3.3.1 Overview of Resource Dependence Theory .................................................. 126
3.3.3.2 Resource Dependence Theory in International Business Literature............... 129
3.3.4 Contingency Theory ............................................................................................. 135
3.3.4.1 Overview of Contingency Theory ................................................................... 135
3.3.4.2 Contingency Theory in International Business Literature ............................... 139
3.3.5 Linking the Theoretical Perspectives .................................................................... 143
3.3.5.1 Relationship Between RBV and RDT ............................................................ 144
3.3.5.2 Relationship Between Contingency Theory and RBV .................................... 146
3.3.5.3 Relationship Between Contingency Theory and RDT .................................... 147
3.3.5.4 Application of Theoretical Lenses .................................................................. 149
3.4 Contingent and Dynamic Resource-Based Framework ............................................... 151
3.4.1 Introduction and Basic Assumptions ..................................................................... 151
3.4.2 Entrepreneurial Resource Management ............................................................... 153
3.4.2.1 Initiative-Related Opportunity Identification .................................................... 155
3.4.2.2 Initiative-Related Resource Structuring ......................................................... 156
3.4.2.3 Initiative-Related Resource Bundling ............................................................. 160
3.4.3 Headquarters-Subsidiary Alignment ..................................................................... 162
3.4.3.1 Headquarters Involvement ............................................................................ 166
3.4.3.2 Corporate Resistance .................................................................................... 168
3.4.3.3 Subsidiary Initiative Selling ............................................................................ 170
3.4.3.4 Summary of Subsidiary Initiative-Taking Behavior ......................................... 173
3.4.4 Subsidiary Initiative-Taking Outcomes .................................................................. 175
3.4.4.1 Realized Subsidiary Initiatives ....................................................................... 176
3.4.4.2 Resource-Based Outcomes........................................................................... 177
3.4.4.3 Subsidiary Evolution ...................................................................................... 182
3.4.5 Subsidiary Roles as Contingency Factors ............................................................ 184
3.4.6 Conclusion ........................................................................................................... 190
3.5 Predictions for Role-Specific Initiative-Taking .............................................................. 192
3.5.1 Role Typology by Bartlett and Ghoshal................................................................. 192
3.5.1.1 Strategic Importance of the Subsidiary Environment ..................................... 192
xiii
3.5.1.2 Subsidiary Resources and Capabilities .......................................................... 200
3.5.1.3 Role-Specific Predictions ............................................................................... 208
3.5.2 Role Typology by Jarillo and Martinez .................................................................. 224
3.5.2.1 Subsidiary’s Localization and Local Responsiveness .................................... 224
3.5.2.2 Subsidiary Integration .................................................................................... 231
3.5.2.3 Role-Specific Predictions ............................................................................... 238
4 EMPIRICAL STUDY ....................................................................................................... 259
4.1 Research Philosophy ................................................................................................... 259
4.2 Research Design ......................................................................................................... 267
4.2.1 Rationale for Case Study Design .......................................................................... 268
4.2.2 Description of the Multiple Case Study Design ..................................................... 272
4.2.2.1 Selection of the Case Study Design .............................................................. 272
4.2.2.2 Determination of Units of Analysis and Units of Observation ......................... 273
4.2.2.3 Case Selection .............................................................................................. 273
4.2.2.4 Types of Data ................................................................................................ 279
4.3 Operationalization of the Research Framework ........................................................... 280
4.3.1 Subsidiary Role Dimensions ................................................................................. 280
4.3.1.1 Strategic Importance of the Subsidiary Environment ..................................... 280
4.3.1.2 Subsidiary Resources and Capabilities .......................................................... 282
4.3.1.3 Subsidiary’s Localization and Local Responsiveness .................................... 284
4.3.1.4 Subsidiary Integration and Subsidiary Autonomy ........................................... 286
4.3.2 Subsidiary Initiative-Taking ................................................................................... 289
4.3.2.1 Subsidiary Initiative Opportunity Identification ................................................ 289
4.3.2.2 Resource Structuring ..................................................................................... 292
4.3.2.3 Resource Bundling ........................................................................................ 299
4.3.2.4 Headquarters-Subsidiary Alignment .............................................................. 302
4.3.3 Subsidiary Initiative-Taking Outcome .................................................................... 304
4.3.3.1 Extent and Types of Subsidiary Initiatives ..................................................... 305
4.3.3.2 Specialized Subsidiary Resources and Capabilities for MNC Application ...... 307
4.3.4 Additional Measures ............................................................................................. 309
4.3.4.1 Subsidiary Role and Position in the MNC ...................................................... 309
4.3.4.2 Subsidiary Performance ................................................................................ 311
4.3.4.3 Control Measures .......................................................................................... 312
4.4 Collection of Data ........................................................................................................ 313
4.4.1 Questionnaire ....................................................................................................... 314
4.4.1.1 Objectives ..................................................................................................... 314
4.4.1.2 Approach ....................................................................................................... 315
4.4.2 Interviews ............................................................................................................. 318
4.4.2.1 Objectives ..................................................................................................... 318