Towards Innovation in Multinational Corporation Subsidiaries: Development of an Instrument to Select and Evaluate Value Driven Strategies

Sinead Corry, Kathryn Cormican


This paper examines the complex, interdependent relationship between multinational companies and their subsidiaries. It discusses how subsidiary role development and specific strategic initiatives may add new value to corporations. While previous studies have identified the need for more proactive management practices, there are few practical guides available to managers to help them improve their performance. This paper addresses this deficit and contributes new knowledge on subsidiary role development practices in terms of selection and evaluation. Through an in-depth analysis of extant literature, the research developed and tested an instrument that allows decision makers to assess their company against good practice. This instrument (or audit tool) is an accurate, reliable and valid mechanism to measure a subsidiary’s role development strategies.


Multi-national corporation, subsidiary, strategy selection and evaluation, best practice analysis, scorecard

Full Text:



Achcaoucaou, F., Miravitlles, P., and León-Darder, F. (2014). Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness. International Business Review, 23 (1), 76-90.

Allen, I.E. and Seaman, C.A. (2007). Likert scales and data analyses. Quality Progress, 40, pp. 64-65.

Ambos, B., and Schlegelmilch, B.B. (2007). Innovation and control in the multinational firm: A comparison of political and contingency approaches. Strategic Management Journal, 28 (5), pp. 473–486.

Ambos, T.C., Andersson, U. and Birkinshaw, J. (2010). What are the consequences of initiative-taking in multinational subsidiaries. Journal of International Business Studies, 41, pp. 1099-1118.

Balogun, J., Jarzabkowski, P., and Vaara, E. (2011). Selling, resistance and reconciliation: A critical discursive approach to subsidiary role evolution in MNEs. Journal of International Business Studies, 42 (6), pp. 765-786.

Bevan, A. A., Estrin, S. and Meyer, K. E. (2004). Institution building and the integration of Eastern Europe in international production. International Business Review, 13, pp. 43–64.

Birkinshaw, J. and Hood, N. (1998). Multinational subsidiary evolution: capability and charter change in foreign-owned subsidiary, Academy of Management Review, 23 (4) pp. 773–795.

Birkinshaw, J. and Fry, N. (1998). Subsidiary initiatives to develop new markets. Sloan Management Review, 39, pp. 51-61.

Birkinshaw, J. (1997). Entrepreneurship in multinational corporations: The characteristics of subsidiary initiatives. Strategic Management Journal, 18, pp. 207-229.

Birkinshaw, J., Bouquet, C. and Ambos, T. (2006). Attention HQ. Business Strategy Review, 17, pp. 4-9.

Blazejewski, S. and Becker-Ritterspach, F. (2011). Conflict in headquarter–subsidiary relations: a critical literature review and new directions, C. Dörrenbächer, M. Geppert (Eds.), Politics and Power in the Multinational Corporation: The Role of Institutions, Interests and Identities, Cambridge University Press, Cambridge.

Bouquet, C. and Birkinshaw J. (2008a). Managing power in the multinational corporation: How low-power actors gain influence. Journal of Management, 34, pp. 477-508.

Bouquet, C. and Birkinshaw J. (2008b). Weight versus voice: How foreign subsidiaries gain attention from corporate headquarters. Academy of Management Journal, 51, pp. 577-601.

Boussebaa, M. (2009). Struggling to organize across national borders: The case of global resource management in professional service firms. Human Relations, 62, 6 pp. 829–850.

Cantwell, J. and Mudambi, R. (2005). MNE competence‐creating subsidiary mandates. Strategic Management Journal, 26, pp. 1109-1128.

Cantwell, J. and Iguchi, C. (2005). Effects of backward linkages to local suppliers’ development path: The case of the Malaysian electrical and electronics industry, A. Giroud, A.T. Mohr, D. Yang (Eds.), Multinationals and Asia: Organizational and institutional relationships, Routledge, London, New York (2005), pp. 54–71

Chisea, V., Coughlan, P. and Voss, C.A. (1996). Development of a technical innovation audit. Journal of Product Innovation Management, 13, pp. 105-136.

Cormican, K. and O’Sullivan, D. (2003). A scorecard for supporting enterprise knowledge management. Journal of Information & Knowledge Management, 2, (3), pp. 191-201.

Cortina, J.M. (1993). What is coefficient alpha? An examination of theory and applications. Journal of Applied Psychology, 78, 1, 98- 104.

Delany E. (2000). Strategic development of the multinational subsidiary through subsidiary initiative-taking. Long Range Planning, 33, pp. 220-244.

DeVellis, R.F. (2012). Scale development: Theory and applications (Vol. 26). Sage publications.

DeVon, H.A., Block, M.E., Moyle-Wright, P., Ernst, D.M., Hayden, S.J., Lazzara, D.J., Savoy, S.M. and Kostas-Polston, E. (2007). A psychometric toolbox for testing validity and reliability. Journal of Nursing scholarship, 39, pp. 155-164.

Di Minin, A. and Zhang, J. (2010). An exploratory study on international R&D strategies of Chinese companies in Europe. Review of Policy Research, 27 (4), pp. 433–455

Dörrenbächer, C. and Gammelgaard, J. (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, pp. 266-283.

Dutton, J.E. and Ashford, S.J. (1993). Selling issues to top management. Academy of Management Review, 18, pp. 397-428.

Dutton, J.E. and Ashford, S.J., O'Neill, R.M., Hayes, E. and Wierba, E.E. (1997). Reading the wind: How middle managers assess the context for selling issues to top managers. Strategic Management Journal, 18, (5), pp. 407 to 423

Fennelly, D. and Cormican, K. (2006). Value chain migration from production to product centred operations: an analysis of the Irish medical device industry. Technovation, 26, (1), pp. 86-94.

Forza, C. (2002). Survey research in operations management: a process-based perspective. International journal of operations & production management, 22, pp. 152-194.

Garcia-Pont, C., Canales, J.I. and Noboa, F. (2009). Subsidiary strategy: The embeddedness component, Journal of Management Studies, 46, (2), pp. 182–214

Ghoshal, S. and Bartlett, C.A. (1990). The multinational corporation as an interorganizational network. Academy of Management Review, pp. 603-625.

Haladyna, T.M. (2004). Developing and validating multiple-choice test items, Routledge.

Hansen, M. W., Petersen, B., and Wad, P. (2011). Change of subsidiary mandates in emerging markets: The case of Danish MNCs in India. Transnational Corporations Review, 3, (2), pp. 104-116.

Hardesty, D.M. and Bearden, W.O. (2004). The use of expert judges in scale development: Implications for improving face validity of measures of unobservable constructs. Journal of Business Research, 57, pp. 98-107.

Heidenreich, M. (2012). The social embeddedness of multinational companies: a literature review. Socio-Economic Review, 10, pp. 549-579.

Hensley, R.L. (1999). A review of operations management studies using scale development techniques. Journal of Operations Management, 17, pp. 343-358.

Jindra, B., Giroud, A., and Scott-Kennel, J. (2009). Subsidiary roles, vertical linkages and economic development: Lessons from transition economies. Journal of World Business, 4, (2), pp. 67-179.

Lawshe, C.H. (1975). A quantitative approach to content validity. Personnel psychology, 28, pp. 563-575.

Lewis, P., Thornhill, A. and Saunders, M. (2012). Research Methods for Business Students 6th Edition, Pearson Education: Harlow.

Luo, Y. (2005). Toward co-opetition within a multinational enterprise: A perspective from foreign subsidiaries, Journal of World Business, 40, (1), pp. 71–90

Mitchell, R.K., Agla, B.R. and Wood, D.J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, pp. 853-886.

Mudambi, R. and Navarra, P. (2004). Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs. Journal of International Business Studies, 35, pp. 385-406.

Nunnally, J.C. (2010). Psychometric Theory 3E, Tata McGraw-Hill Education.

Paterson, S. and Brock, D.M. (2002). The development of subsidiary-management research: review and theoretical analysis. International Business Review, 11, pp. 139-163.

Persaud, A. (2005). Enhancing synergistic innovative capability in multinational corporations: an empirical investigation, Journal of Product Innovation Management, 22, pp. 412–429.

Polit, D. F., and Beck, C. T. (2006). The content validity index: are you sure you know what's being reported? Critique and recommendations. Research in nursing & health, 29, (5), pp. 489-497.

Reilly, M., Scott, P. and Mangematin, V. (2012). Alignment or independence? Multinational subsidiaries and parent relations. Journal of Business Strategy, 33, (2), pp. 4-11.

Santos, J.R.A. (1999). Cronbach’s alpha: A tool for assessing the reliability of scales. Journal of Extension, 37, pp. 1-5.

Sargeant, L.W. (1990). Strategic planning in a subsidiary. Long Range Planning, 23, pp. 43-54.

Schmid, S., Dzedek, L. R., and Lehrer, M. (2014). From Rocking the Boat to Wagging the Dog: A Literature Review of Subsidiary Initiative Research and Integrative Framework. Journal of International Management, 20, (2), pp. 201-218.

Schotter, A., and Beamish, P. W. (2011). Performance effects of MNC headquarters–subsidiary conflict and the role of boundary spanners: The case of headquarter initiative rejection. Journal of International Management, 17, (3), pp. 243-259.

Scott, P., Gibbons, P. and Coughlan, J. (2010). Developing subsidiary contribution to the MNC—Subsidiary entrepreneurship and strategy creativity. Journal of International Management, 16, pp. 328-339.

Sofka, W., Shehu, E., and de Faria, P. (2014). Multinational subsidiary knowledge protection—Do mandates and clusters matter? Research Policy, 43, (8), pp. 1320-1333.

Tavakol, M. and Dennick, R. (2011). Making sense of Cronbach's alpha. International Journal of Medical Education, 2, pp. 53-55.

Tavares, A.T. and Young, S. (2006). Sourcing patterns of foreign-owned multinational subsidiaries in Europe. Regional Studies, 40, (6), pp. 583-600.

Tseng, C.H., Fong, C.M. and Su, K.H. (2004). The determinants of MNC subsidiary initiatives: implications for small business. International Journal of Globalisation and Small Business, 1, pp. 92-114.

Voss, C., Chisea, V. and Coughlan, P. (1994). Developing and testing benchmarking and self-assessment frameworks in manufacturing. International Journal of Operations & Production Management, 14, pp. 83-100.

Wang, Y. and Suh, C.S. (2009). Towards a re-conceptualization of firm internationalization: heterogeneous process, subsidiary roles and knowledge flow, Journal of International Management, 15, pp. 447–459.

Worthington R.L. and Whitaker T.A. (2006). Scale development research a content analysis and recommendations for best practices. The Counseling Psychologist, 34, (6), pp. 806–838.

Wynd, C.A., Schmidt, B. and Schaefer, M.A. (2003). Two quantitative approaches for estimating content validity. Western Journal of Nursing Research, 25, pp. 508-518.

Yamin, M. and Andersson, U. (2011). Subsidiary importance in the MNC: What role does internal embeddedness play? International Business Review, 20 (2), pp. 151–162.

Young, S. and Tavares, A.T. (2004). Centralization and autonomy: Back to the future, International Business Review, 13 pp. 215–237.

Zeschky, M., Daiber, M., Widenmayer, B., and Gassmann, O. (2014). Coordination in global R&D organizations: An examination of the role of subsidiary mandate and modular product architectures in dispersed R&D organizations. Technovation, 34 (10), pp. 594-604.

Copyright (c) 2019 Journal of Technology Management & Innovation

2019 © Universidad Alberto Hurtado - Facultad de Economía y Negocios. 
Erasmo Escala 1835 - Santiago, Chile.
Economic Analysis Review | Observatorio Económico | Gestión y Tendencias 

Journal Supported by