Foreign Market Subsidiary Mandates

Over the last fifty years the unit of analysis in the research field of international business (henceforth ‘IB’) has seen a shift from a country to a firm and recently to a subsidiary level. Looking ahead, scholars are encouraged “to study the linkages among the key units of analysis adopted in the previous fifty years, with a focus on the subsidiary as the key building block, taking into account the reality of regional strategy and structure for most MNEs” (Rugman, Verbeke & Nguyen, 2011: 779). Understanding the emergence, evolution and potential collapse of subsidiary mandates beyond original host markets not only links the aforementioned units of analysis, but it also allows an initial look at the dynamic nature of subsidiary internationalization as suggested by Blankenburg Holm, Drogendijk, Hohenthal, Holm, Johanson and Zander (2009).

he relatively unexplored research topic of internationalization processes at the subsidiary level initially suggested a rather inductive study approach, which would not or only to a limited degree require a thorough examination of literature in relevant research streams. Eisenhardt (1989b: 536) supported this point by postulating that “theory-building research is begun as close as possible to the ideal of no theory under consideration and no hypothesis to test”. Gummensson (2000), however, confronted this statement by questioning the need for continuously reinventing the wheel in the course of new studies and actually urged scholars to make use of existing theory also for qualitative research undertakings. A pragmatic middle ground had already been set by Perry (1998: 789), who established ties between the two perspectives by noting that “pure induction might prevent researchers from benefiting from existing theory, just as pure deduction might prevent the development of new and useful theory”.

The study relied on multiple case studies using a retrospective perspective in order to contribute to the academic topic of subsidiary internationalization processes. The defined qualitative research method therefore not only corresponds to the relatively unexplored research topic but is also in line with the note of Blankenburg Holm et al. (2009: 4) on peripheral internationalization processes in modern MNCs that “future research should study these issues empirically, preferably through case study methodologies and/or with longitudinal designs”. Throughout the preparatory work for the research endeavor the investigator was strongly inspired by the work of Pauwels, Lommelen and Matthyssens (2004) that analyzed the internationalization processes of service companies and thereby also relied on multiple case studies with a retrospective research perspective. In addition to having the same unit of analysis, namely internationalization processes, as well as a predominately dynamic study perspective, the work of Pauwels et al. (2004) further exhibited a similar number of cases as well as a clear focus on semi-structured interviews with key process stakeholders as the primary data source for the study. Moreover, from their experience a comprehensive guideline for multiple case study work was elaborated (Pauwels & Matthyssens, 2004) that turned out to be very helpful in defining the basic architecture of the study and in executing the data collection and analysis undertaking.

This chapter aims to provide the reader with an extensive description of each case of subsidiary internationalization, encompassing a brief overview of the case company and the focal subsidiary as well as a description of historic internationalization processes and future outlooks for related cross-border subsidiary mandates. Each case description will be split into the initial mandate gain and subsequent mandate modifications, including a current outlook for mandate development. Finally, the outcome of the three most relevant within-case analysis techniques – critical incident charts, event-state networks and case dynamics matrixes – will be outlined for each case. While critical incident charts should help the observer to quickly obtain a broader picture of the core process items, the subsequent illustration of event-state networks should enable third party investigators to get a sound understanding about what states or events caused subsidiary internationalization processes to unfold in a particular form. Finally, case dynamics matrixes should allow for differentiated perspectives from the parent company and the focal subsidiary on stimuli, causes and effects related to internationalization processes of foreign subsidiaries.

Following the detailed case descriptions and within-case analyses in the previous part of the study the initial section of this chapter is designed to compare individual case patterns across all eleven cases of subsidiary internationalization processes. The aim of such cross-case analysis (Miles & Huberman, 1994) is to come up with robust patterns of cross-border subsidiary responsibilities and associated mandate development paths. The main challenge is thereby not only to come up with case similarities and differences but to also shed light on the question on why some incidents replicate each other whilst others unfold in a particular and deviant form. In doing so, the investigator strongly relied on the advice of Eisenhardt (1989b: 540) “to select categories and dimensions, and then to look for within-group similarities coupled with intergroup differences”.

This study contributes to the relatively unexplored research field (Blankenburg Holm et al., 2009) of internationalization processes of foreign subsidiaries in several ways. Overall, the findings allow a first dynamic view of drivers and restrictions in the process of subsidiary internationalization and in evolutionary paths of cross-border subsidiary mandates. By accounting for multiple embeddedness of foreign subsidiaries (Forsgren et al., 2005) and the competition for corporate marketplace (Galunic & Eisenhardt, 1996), both horizontally versus the parent company and vertically versus other MNC units, the study helps explain the effects of the increasing complexity of contemporary MNCs.