Skip to main content
SpringerLink
Log in
Book cover

US Firms’ Business Competence in the Taiwanese IT Industry pp 135–181Cite as

The Determinants of Strategy Formulation and Change in Foreign Subsidiaries and Their Functional Units

  • Chapter
  • First Online:

  • 278 Accesses

Part of the book series: Understanding China ((UNCHI))

Abstract

This chapter investigates the determinants of strategy formulation and change at the subsidiary and functional unit levels. By contrast to previous studies, which only discussed the determinants of strategy formulation and change in foreign subsidiaries of MNEs located in developed countries, the manuscript’s contribution to knowledge is in advancing a more elaborate list of elements and indicators to measure the relevant factors associated with strategy formulation and change in foreign subsidiaries of different strategy types operating in an emerging host economy and to extend its application to measure the relevant factors associated with strategy formulation and change in different types of functional units belonging to subsidiaries of different strategy types. This study clearly identifies the key elements behind each of the three factors (subsidiary, head office or host country) that determine strategy formulation and change, and it constructs appropriate indicators to measure each element. It compares and contrasts the elements and the factors that determine strategy formulation and change in (1) foreign subsidiaries of different strategy types and (2) functional units belonging to foreign subsidiaries of different strategy types.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Source: Nasdaq, ‘Dell’s Taiwan R&D Centre To Hire More Than 100 Workers Next Year’, http://www.nasdaq.com, updated: 12-09-2009.

  2. 2.

    According to the Fortune Global 500, the largest three manufactures of computers and equipment and information technology in 2005 and 2006 were US-owned.

References

  • Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33–46.

    Article  Google Scholar 

  • Andersson, U., & Holm, U. (2002). Managing integration of subsidiary knowledge in the multinational corporation – A note on the role of headquarters. In V. Havila, M. Forsgren, & H. Hakansson (Eds.), Critical perspectives on internationalization (pp. 359–385). Amsterdam: Pergamon.

    Google Scholar 

  • Bartlett, C. A., & Ghoshal, S. (1986). Tap your subsidiaries for global reach. Harvard Business Review, 64(4), 87–94.

    Google Scholar 

  • Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders: The transnational solution. Boston: Harvard Business School Press.

    Google Scholar 

  • Bartlett, C. A., & Ghoshal, S. (2000). Transnational management: Text, cases and readings in cross-border management (3rd ed.). Boston, MA: McGraw-Hill.

    Google Scholar 

  • Birkinshaw, J. (1996). How subsidiary mandates are gained and lost. Journal of International Business Studies, 27(3), 467–496.

    Article  Google Scholar 

  • Birkinshaw, J., & Hood, N. (1997). An empirical study of development processes in foreign-owned subsidiaries in Canada and Scotland. Management International Review, 37(4), 339–364.

    Google Scholar 

  • Birkinshaw, J., & Hood, N. (1998a). Multinational subsidiary evolution: Capability and charter change in foreign-own subsidiary companies. Academy of Management Review, 23(4), 773–795.

    Google Scholar 

  • Birkinshaw, J., Hood, N., & Jonsson, S. (1998). Building firm-specific advantages in multinational corporations: The role of subsidiary initiative. Strategic Management Journal, 19(3), 221–241.

    Article  Google Scholar 

  • Cantwell, J., & Mudambi, R. (2000). The location of MME R&D activity: The role of investment incentives. Management International Review, 40(1), 127–148.

    Google Scholar 

  • De Wit, B., & Meyer, R. (2004). Strategy: Process, content, context (3rd ed.). London: Thomson Learning.

    Google Scholar 

  • Dedrick, J., & Kraemer, K. L. (2007). Globalization of innovation: The personal computing industry. Prepared for the National Academic of sciences, STEP Project.

    Google Scholar 

  • Delany, E. (1998). Strategic development of multinational subsidiaries in Ireland. In J. Birkinshaw & N. Hood (Eds.), Multinational corporate evolution and subsidiary development (pp. 239–267). New York: St Martins Press.

    Chapter  Google Scholar 

  • Delios, A., & Beamish, P. W. (1999). Ownership strategy of Japanese firms: Transactional, institutional and experience influences. Strategic Management Journal, 20(10), 915–933.

    Article  Google Scholar 

  • Doz, Y., & Prahalad, C. K. (1986). Controlled variety: A challenge for HR management in the MNC. Human Resource Management, 25(1), 55–71.

    Article  Google Scholar 

  • Egelhoff, W. G., Gorman, L., & McCormick, S. (1998). Using technology as a path to subsidiary development. In J. Birkinshaw & N. Hood (Eds.), Multinational corporate evolution and subsidiary development (pp. 213–238). New York: St Martins Press.

    Chapter  Google Scholar 

  • Forsgren, M. (1989). Managing the internationalization process – The Swedish case. London: Routledge.

    Google Scholar 

  • Gatignon, H., & Anderson, E. (1988). The multinational corporation’s degree of control over foreign subsidiaries: An empirical test of a transaction cost explanation. Journal of Law, Economics, and Organization, 4(2), 305–336.

    Google Scholar 

  • Ghoshal, S., & Bartlett, C. A. (1988). Creation, adoption, and diffusion of innovations by subsidiaries of multinational corporations. Journal of International Business Studies, 19(3), 365–388.

    Article  Google Scholar 

  • Ghoshal, S., & Bartlett, C. A. (1990). The multinational corporation as an interorganizational network. Academy of Management Review, 15(4), 603–625.

    Google Scholar 

  • Ghoshal, S., & Nohria, N. (1989). Internal differentiation within multinational corporations. Strategic Management Journal, 10(4), 323–337.

    Article  Google Scholar 

  • Gupta, A. K., Govindarajan, V., & Malhotra, A. (1999). Feedback-seeking behavior within multinational corporations. Strategic Management Journal, 20(3), 205–222.

    Article  Google Scholar 

  • Hambrick, D. C., & Finkelstein, S. (1987). Managerial discretion: A bridge between polar views on organizations. Research in Organizational Behavior, 9, 369–406.

    Google Scholar 

  • Hill, W. L. C., & Jones, G. R. (2007). Strategic management: An integrated approach (7th ed.). Boston: Houghton Mifflin.

    Google Scholar 

  • Holm, U., Malmberg, A., & Sölvell, Ö. (2003). Subsidiary impact on host-country economies: The case of foreign-owned subsidiaries attracting investment into Sweden. Journal of Economic Geography, 3(4), 389–408.

    Article  Google Scholar 

  • Jarillo, J. C., & Martinez, J. L. (1990). Different roles for subsidiaries: The case of multinational corporations in Spain. Strategic Management Journal, 11(7), 501–512.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm – A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8, 23–32.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J. E. (1990). The mechanism of internationalization. International Marketing Review, 7(4), 11–24.

    Article  Google Scholar 

  • Johanson, J., & Wiedersheim-Paul, F. (1975). The internationalization of the firm – Four Swedish cases. Journal of Management Studies, 12(3), 305–322.

    Article  Google Scholar 

  • Kavoosi, M. (1992). Control of subsidiaries in the developing courtiers: The case of Swedish multinationals. Göteborg: BAS.

    Google Scholar 

  • Khandwalla, P. N. (1972). The effect of different types of competition on the use of management controls. Journal of Accounting Research, 10, 275–285.

    Article  Google Scholar 

  • Killing, P. (1982). How to make a global joint venture work. Harvard Business Review, 60(1), 120–127.

    Google Scholar 

  • Kumar, S., & Seth, A. (1998). The design of coordination and control mechanisms for managing joint venture-parent relationship. Strategic Management Journal, 19(6), 579–599.

    Article  Google Scholar 

  • Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770–791.

    Article  Google Scholar 

  • Morris, M. H. (1998). Entrepreneurial intensity: Sustainable advantages for individuals, organizations, and societies. Westport, CO: Quorum Books.

    Google Scholar 

  • Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change. Harvard University Press.

    Google Scholar 

  • O’Donnell, S. W. (2000). Managing foreign subsidiaries: Agents of headquarters, or an interdependent network? Strategic Management Journal, 21(5), 525–548.

    Article  Google Scholar 

  • Ouchi, W. G. (1977). The relationship between organizational structure and organizational control. Administrative Science Quarterly, 24, 833–848.

    Google Scholar 

  • Paterson, S. L., & Brock, D. M. (2002). The development of subsidiary-management research: Review and theoretical analysis. International Business Review, 11, 139–163.

    Article  Google Scholar 

  • Penrose, E. T. (1959). The theory of the growth of the firm. New York: Oxford University Press.

    Google Scholar 

  • Porter, M. (1998). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.

    Google Scholar 

  • Prahalad, C. K. (1999). Business unit efficiency and leveraging corporate competencies. Journal of Applied Corporate Finance, 12(2), 48–68.

    Article  Google Scholar 

  • Prahalad, C. K., & Doz, Y. L. (1981). An approach to strategic control in MNCs. Sloan Management Review, 22(4), 5–14.

    Google Scholar 

  • Roth, K., & Morrison, A. J. (1992). Implementing global strategy: Characteristics of global subsidiary mandates. Journal of International Business Strategy, 23(4), 715–735.

    Article  Google Scholar 

  • Roth, K., Schweiger, D. M., & Morrison, A. J. (1991). Global strategy implementation at the business unit level: Operational capabilities and administrative mechanisms. Journal of International Business Studies, Third Quarter, pp. 369–402.

    Google Scholar 

  • Taggart, J. H. (1998). Strategy shifts in MNC subsidiaries. Strategic Management Journal, 19(7), 663–681.

    Article  Google Scholar 

  • Taggart, J. H., & Hood, N. (1999). Determinants of autonomy in multinational corporation subsidiaries. European Management Journal, 17(2), 226–236.

    Article  Google Scholar 

  • Tavares, A. T. (2001). Strategic management of multinational networks: A subsidiary evolution perspective. Paper presented at The 6th International Symposium on International Manufacturing, Cambridge, 9th–11th September.

    Google Scholar 

  • Walsh, S., Linton, J., Boylan, R., & Sylla, C. (2002). The evolution of technology management practice in developing economies: Findings from northern china. International Journal of Technology Management, 24(2/3), 311–329.

    Article  Google Scholar 

  • White, R. E., & Poynter, T. A. (1984). Strategies for foreign-owned subsidiaries in Canada. Business Quarterly, 48(4), 59–69.

    Google Scholar 

  • Zahra, S. A., Dharwadkar, R., & George, G. (2000). Entrepreneurship in multinational subsidiaries: the effects of corporate and local environmental contexts. Conference Proceedings, Entrepreneurship, Academy of Management, Toronto, Canada, 4–9 Aug 2000.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. International Business and Economics, University of Greenwich, London, UK

    Pi-Chi Chen & Young-Chan Kim

Authors
  1. Pi-Chi Chen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Young-Chan Kim
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer International Publishing Switzerland

About this chapter

Cite this chapter

Chen, PC., Kim, YC. (2016). The Determinants of Strategy Formulation and Change in Foreign Subsidiaries and Their Functional Units. In: US Firms’ Business Competence in the Taiwanese IT Industry. Understanding China. Springer, Cham. https://doi.org/10.1007/978-3-319-32028-1_4

Download citation

Publish with us

Policies and ethics

Search

Navigation