Entrepreneurship In Multinational Corporations: The Initiative Process In Foreign Subsidiaries

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Birkinshaw, Julian Mark
Business Administration; General
thesis / dissertation description
This is an empirical study of initiatives in the subsidiaries of multinational corporations. An initiative is the subsidiary-driven creation of a value-adding activity. While previous research has focused on the "world product mandates" earned as a result of initiatives, or the corporate systems that facilitate subsidiary initiatives, this study is concerned with the internal processes that actively drive subsidiary initiatives. This issue is of vital importance to subsidiary managers who are looking for ways to enhance their value-added role in the corporation: it also has substantial implications for corporate strategy and for theoretical models of multinational management and entrepreneurship.;Two research questions drove this research: "What forms do subsidiary initiatives take?" and "What is the initiative process?" The research was undertaken using an inductive approach, building knowledge from an iterative combination of empirical evidence and theory. A total of 39 initiatives from six Canadian subsidiaries of U.S. multinational corporations formed the final sample. Data was gathered through over 100 personal interviews, but also from two questionnaires and archival and secondary sources.;There were two key findings. First, four distinct types of subsidiary initiatives were identified, labelled "reconfiguration", "local market", "competitive bid" and "mandate extension". These four types were empirically validated, and conceptualized in terms of the market opportunities they tapped into. Second, the initiative process was analyzed in depth, and found to consist of four phases representing the increasing viability of the initiative. The process was found to be strongly influenced by the organizational context of the subsidiary, as predicted by Burgelman's model of corporate venturing. The key contribution, however, is the observation that the internally-defined subsidiary context is a more critical driver of initiative than the externally-defined corporate context.;The implication for the management of multinational subsidiaries is that the assignment of subsidiary roles has limitations, because it assumes the opportunity set of the subsidiary can be prejudged and better understood from the centre than the periphery. Subsidiaries should have sufficient slack that opportunities can be identified and developed; and they should attempt to build an internal management context to foster the entrepreneurial spirit. Theoretical and managerial implications are developed around these core insights.