Multinational Subsidiary Evolution: Capability and Charter Change in Foreign-Owned Subsidiary Companies (1998)

There has been a profound evolution in thinking about multinational corporations (MNCs) [since the late 1980s]. Traditionally, in academic models researchers assumed that ownership-specific advantages were developed at the corporate headquarters and leveraged overseas through the transfer of technology to a network of foreign subsidiaries (Vernon, 1966; Dunning, 1981). As these overseas subsidiaries grew in size and developed their own unique resources, however, it became apparent to many researchers that corporate headquarters was no longer the sole source of competitive advantage for the MNC. Scholars developed models such as the heterarchy (Hedlund, 1986) and the transnational (Bartlett and Ghoshal, 1989) to reflect the critical role played by many subsidiaries in their corporations’ competitiveness, and research attention began to shift toward understanding the new roles played by subsidiaries.