• The Impact of MNC Regional Strategies on Subsidiaries: Changes in the Role of Contributing Subsidiaries

Abstract

Using a case study approach, this paper explores how regional strategy adopted by MNCs influences the role of contributing subsidiaries. A contributing subsidiary will be more important for a MNC in the following situations: when a key success factor of the industry is network embeddedness; when sophisticated consumers in the host market are opinion leaders within the region; and when a parent does not have enough knowledge about the host country of a black hole while the nature of the market served by the contributing subsidiary is similar to that host market. A MNC can adopt three kinds of organizational design to explore the ability of contributing subsidiaries, namely, virtual, charismatic and focused centers of excellences. The more important of a contributing subsidiary, the more the knowledge it integrates, and the more the functional activities it is in charge. Subsidiary autonomy increases with the increase of subsidiary importance, too.

Keywords: contributing subsidiary, subsidiary role, regional strategy, autonomy