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The Role of the Subsidiary in International Business pp 107–134Cite as

Determinants of Functional Responsibilities of Subsidiaries: Empirical Verification

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Abstract

The chapter presents results of an empirical study focused on functional responsibilities of 193 subsidiaries operating in the Polish manufacturing industry during 2012–2017. In particular, the chapter describes diversity in terms of market scope and sophistication level of value chain functions encompassing production, assembly, procurement, marketing, internal sales and distribution, external distribution, and R&D. Our results demonstrate that discrepancies among the functional responsibilities of subsidiaries go far beyond what is commonly acknowledged in extant research. Furthermore, changes in subsidiaries’ functional responsibilities are relatively common and have a rather gradual character. The chapter also presents results of the model explaining the level of functional responsibilities in manufacturing, sales, and innovation areas through a subsidiary’s distinct capabilities, initiative, internal and external embeddedness, and supply environment.

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Notes

  1. 1.

    The time of data collection for the compered studies differs substantially, which may partially explain the abovementioned differences.

  2. 2.

    For better readability, paths with no observations were left empty.

  3. 3.

    The high level of composite reliability fit for functional responsibilities in the innovation area is related to the fact that relatively few subsidiaries performed the R&D function, and thus many observations were assigned value 0 in case of both market scope and sophistication level.

  4. 4.

    To check if multicollinearity threatens the estimates of the models and potentially causes misinterpretation of their results’ predictive ability, we calculated the variance inflation factor (VIF). Marquardt (1970), Myers (1990), and Hair et al. (2006) suggested that VIF values should not exceed 10. No VIF values in any of our models exceeded 5. Thus, multicollinearity does not seem to threaten the estimates of the models.

  5. 5.

    Since our models are based on two sources of information (self-reported measures provided by the respondents, and objective financial and organizational data gathered from electronic databases), they do not face the problem of common method bias (Podsakoff and Organ 1986).

  6. 6.

    Although the relationship was statistically significant only for the manufacturing area, it was positive also in the marketing and sales and innovation areas. In the two latter cases it was statistically significant at p < 0.15. Thus, lack of statistical significance might be related to the relatively small sample sizes used in this study.

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Authors and Affiliations

  1. Department of International Competitiveness, Poznań University of Economics and Business, Poznań, Poland

    Marlena Dzikowska

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Dzikowska, M. (2019). Determinants of Functional Responsibilities of Subsidiaries: Empirical Verification. In: The Role of the Subsidiary in International Business. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-17527-6_5

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