Subsidiary‐specific advantages in multinational enterprises

TLDR

The paper examines how multinational enterprises build competence internally, focusing on capability creation within foreign subsidiaries. It proposes a new framework that synthesizes ten types of MNE–subsidiary linkages to explain capability development. The authors describe how subsidiary‑specific advantages emerge through these linkages within a differentiated, dispersed network structure of the MNE. They find that several of the ten capability‑development processes are linked to subsidiary‑specific advantages. © 2001 John Wiley & Sons, Ltd.

Abstract

Abstract This paper discusses the internal patterns of competence building in the multinational enterprise (MNE), with a focus on the creation of capabilities in its foreign subsidiaries. We present a new framework to synthesize 10 types of MNE–subsidiary linkages leading to capability development. We find that several of the 10 capability development processes are associated with subsidiary‐specific advantages. We discuss the process of subsidiary‐specific advantage development within the organizational structure of the MNE when it is a differentiated network of dispersed operations. Copyright © 2001 John Wiley & Sons, Ltd.