PurposeThe purpose of this paper is to examine the process of capability building at subsidiary level and the forces preventing such process. The paper discusses and tests three propositions governing this process.Design/methodology/approachThis research is based on multiple case studies. A case study research is most useful when addressing issues about which little prior theory has been developed or empirical evidence collected.FindingsSubsidiaries in Asia operate in a way substantially different from those in the West. Specifically what ways do market specificities in Asian economies serve to either inhibit or positively encourage the development of a subsidiary? What are the circumstances which could induce subsidiaries to outsource production?Research limitations/implicationsFuture research should explore the regional effect on MNE subsidiary types and different flexibilities exhibited in the value chain. What are the specific aspects (macro and micro) that explain variations of business strategies at subsidiary levelboth over time and between countries?Practical implicationsMultinational enterprises (MNEs) should be aware of the strong potential for capability development at the subsidiary level. This increased awareness ought to induce consideration in MNEs about how best to encourage such know capability development and how to leverage these capabilities for a better MNE performance.Social implicationsManagers who knew the host country languages and culture, and have outward-looking attitudes, are in advantageous positions to learn about new opportunities.Originality/valueThe paper offers empirical insights into the state and drivers of subsidiary performance in Asia. Specifically it shows how neglect of external conditions can act to open people’s eyes and foster a capability-building process within subsidiaries.
Multinational Business Review – Emerald Publishing
Published: Dec 10, 2018
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