Foreign subsidiaries can be seen to be the operational wing of an MNC, physically based outside the parent country yet still regulated by the MNC (Birkinshaw 1997, 1998), sometimes subordinate and operating to head office directives (Delany 2000).
This research takes the quieter journey of viewing MNC's from the foreign subsidiary manager's perspective, a story of bottom-up driven successes and failures, hoping to add incrementally to the knowledge that defines the value of foreign subsidiaries (Birkinshaw 2000). Birkinshaw and Hood (1997) propend that a bottom-up perspective is based on viewing the entrepreneurial activities of subsidiary managers as they illustrate proficiency and an inclination to assume extra roles to the MNC head office management.
Effective subsidiary managers innately understand they have a say in the running of the organisation and strive to ensure their power is legitimised. Yet they find themselves balancing on the double edge sword of corporate citizenship and nonconformist (Birkinshaw 2000). As we move through the research we will move between specific key areas, firstly subsidiary initiatives from a local, global and then internal perspective. Secondly we will investigate subsidiary mandates, building on this we will probe how subsidiary initiatives can impact the assigned mandate. Finally we will attempt to build on research advancing why some subsidiary initiatives fail specifically from the 'corporate immune system' (Birkinshaw and Ridderstrale, 1999, p.149) perspective.
This project hopes to provide a subtle shift in knowledge and understanding of how subsidiary managers develop their companies through initiatives and the process which the initiative was taken. Also potentially shining a light on the importance of role development for subsidiaries by understanding how subsidiary initiatives impact their mandates through indepth interviews.
Literature Review
Subsidiary initiatives can be observed to be entrepreneurial activities driven by foreign based, outside parent country, subsidiaries of MNC's, (Birkinshaw and Ridderstrale, 1999; Birkinshaw 1997) progressing proactive approaches to corporation resource allocation and expansion (Miller, 1983; Kanter, 1982). Corporate entrepreneurs create and exploit change within an existing company for economic return by moving resources from low areas of productivity to higher areas attaining greater yield while accepting the higher degree of uncertainty and risk in doing so (Burns, 2008; Parker, 2011).
The entrepreneurial activity of creating and exploiting change within the corporate is sometimes called as intrapreneurship that qualifies as "employee initiatives in organizations to undertake something new, without being asked to do so" (Jong and Wennekers, 2008, p.4). This concept of intrapreneurship is closely related to 'autonomous bottom-up working' as mentioned by Burgleman (1983), which leads us to the notion of subsidiary initiative per-se.
Ultimately subsidiary initiative is the source of variety and the seeds of change for a MNC, but for the majority of firms it is not the modus operandi (Birkinshaw, 2000). MNC's have to 'tap their subsidiaries for global reach' (Ghoshal and Barlett, 1986) listening and responding to subsidiary managers in multiple and differing markets to reap rewards of multinationality, though strategically obvious evidence suggests MNC's disregard it. Its normative policy for head office to control subsidiaries to the point that they have no degree of freedom to identify or pursue new ideas. On the flipside subsidiary initiatives can be encouraged but eventually surpressed by a plethora of control forces (i.e. corporate immune system), so it is valuable in theory but hard to find in practise.
Birkinshaw (2000) propends that subsidiary initiatives come from the 'locus of business opportunity' (Birkinshaw, 2000, p.22) and they are a manifestation of corporate entrepreneurship. Importantly we should differentiate between internal divisions like research and development groups who have a mandate to innovate and other divisions who do not.
Building on this knowledge (Birkinshaw 2000) we can postulate that initiative is viewed as a discrete, proactive undertaking that advances a new way for the corporation to use or expand its resources, for this research we will also add that subsidiary initiatives must include some form of international responsibility to ensure activities are not solely taken to benefit the subsidiary in the local market. Kirzner (1973) contends that 'altertness to hither to unnoticed market opportunities' stimulates entrepreneurs to act.
To date the preference among scholars has been to focus on the initiative process via the actions of the initiative champion. Little attention has been given to the effects of the actions, or inactions, of other corporate actors. Birkinshaw and Ridderstråle (1999) maintain that resistance to corporate entrepreneurship is, absolutely appropriate and that corporations typically have well-defined procedures for assessing funding proposals and that managers develop informal procedures to help them evaluate and choose between the multitude of initiatives. However, in reality it seems likely that errors are made in the selection of initiatives.
There are two main theories regarding the reasons for corporate resistance to entrepreneurial endeavours; first, it is well established that creation-oriented activities tend to be driven out by exploitation-oriented activities (Hedlund & Ridderstråle, 1992; March, 1991; March & Simon, 1958). Creation-oriented activities offer un-certain returns on investment, they threaten existing power structures in a corporation, and they can disrupt established routines.
Second, the ability to gain support for an initiative has been found to be directly linked to the relative power of the unit generating the initiative. As studies by Bower (1972); Day (1994); Rothwell (1977) have demonstrated, the level of influence of the sponsoring unit is more critical to initiative success than the (proposed) technical or financial implications of the underlying project.
Traditional views would convey subsidiaries act as 'global scanners' conveying signals to head office (Vernon 1979). Recently research has (Bartlett and Ghoshal, 1986; Hedlund, 1986) portrayed an image of uniqueness in subsidiaries with vital links to local customers and suppliers. In this situation subsidiaries ability to pursue local opportunities and exploit them on a global scale is an important capability.
Ghosal and Bartlett (1990) introduce the concept of an 'interorganisational network' in which subsidiaries have multiple links to other entities both inside and outside the formal MNC boundaries. Clearly illustrating subsidiaries arent limited to only having a local perspective but showing they sit at the axis of a local, global and internal market interface. Birkinshaw (1997) helps differentiate between these 3 markets by categorising their dimensions. Firstly the 'locus of business opportunity' meaning the market in which the initiative opportunity emerged and secondly the 'locus of pursuit' meaning the market in which the process was realised, these are co-incident and there is no ambiguity.
Birkinshaw and Ridderstråle (1999) identified two types of initiatives the first is internal and the second external using the locus of business opportunity as a distinguishing factor. An internal initiative is a reaction to an opportunity within the organisation. An external initiative targets an opportunity outside the boundaries of the corporation, within either local or global markets. They go on to explain that external initiatives often arise through interactions with bodies beyond the confines of the MNC. This brings about two important differences when compared with internal initiatives. Firstly, no other competitor subsidiary would lose out i.e. the outcome of the initiative is increased performance of the MNC via a new external opportunity. Secondly, whereas in internal initiatives the starting point of the activity is easily pin pointed, most external initiatives evolve incrementally. A decentralized approach to resource allocation was shown to facilitate this. The initiative, in its early stages circumvented the corporate immune system by essentially operating below the radar. Subsidiary managers driving these initiatives use their external contacts to develop the initiatives and present it to HQ as an almost completed project.
Birkinshaw (1997; 2000) contends that there are defining features under which subsidiary initiatives work in each market. Firstly under local markets, where the locus of business opportunity is within the local market, the facilitating conditions must be balanced by a moderate level of autonomy and a fairly strong relationship with the parent company. Autonomy is required in sufficient degree allowing the subsidiary managers to apply resources to the opportunity without interference ,and a well established set of capabilities, switching to the stronger relationship with the parent company at advanced stages so higher levels of resource commitment can be achieved. Secondly the early efforts of a local market initiative are directed towards building product/service for local market customers. Assuming this is successful the challenge is selling the proven concept back to managers in the parent firm building some legitimacy in it for the subsidiary. Finally local market subsidiary initiatives lead to new products/services for local customers, they can also be developed into new business opportunities for the firm as a whole as local customer base becomes global. They are part of the process of adaption and renewal in MNC's providing variety for the MNC's systems to select against. (Birkinshaw 1997; 2000)
Under global markets, where the locus of business opportunity is outside the local market, a high degree of autonomy is of great importance because the subsidiary is typically building on existing business and needs to act swiftly, sometimes to deliver on its world product mandate. Since the line of business is global the subsidiary only requires proven capabilities in the relevant areas. This high degree of autonomy is normally matched by a more distant relationship with managerial counterparts in the parent company. Secondly the early efforts of a global market initiative are externally orientated and assuming the business is doing well significant investment permission will be granted. Finally and immediate effect of global market initiative is specific business areas and capabilities associated with it are developed further. 'Centres of excellence' can be created implying parent company and other subsidiaries stand to benefit from those capabilities (Birkinshaw 1997; 2000).
Subsidiary units are typically low in power which limits both their freedom and autonomy to make changes and their achievement of visibility in head office. The incumbent structure of organisations tends to favor ideas developed in high-power parts of the organization at the expense weaker elements (Burgelman & Grove, 1996; Hamel, 1996). This realisation brings about the question; where does power come from? The literature on the subject highlights the following sources: (1) structural power; and (2) resource-based power. Structural power in a corporation is essentially a granted authority (Weber, 1947).
Resource-based power falls to those who have control over valuable assets, i.e. assets on which others depend (March, 1995; Pfeffer & Salancik, 1974, 1978). Knowledge is such an asset for example in skills tied to certain individuals (Cyert & March, 1963; Nelson & Winter, 1982). Birkinshaw and Ridderstråle (1999) state; 'it is also important to recognize that the subsidiary's external network is an asset from which power can be derived, if it consists of relationships that can only be accessed through the subsidiary.' This means, through finding allies and tapping into their assets the power of the subsidiary unit can be increased.
Another form of resource based power is reputation, gained from performance in historical actions (Pfeffer, 1992). A subsidiary unit with a strong reputation will have its suggestions listened to with more respect by other corporate units, and will typically be favorably treated in resource allocation decisions (Beerlew & Hall, 1966).
The final entity within the interorganizational network (Ghoshal and Bartlett 1990) is the internal market, where the locus of business opportunity could be both inside or outside the local market, or are market opportunities identified in the corporate system. Firstly the most criticial facilitator is the credibility of the subsidiary in the eyes of the parent company. Matched by a geocentric approach by managers in head office who eliminate artifical roadblocks with regards to subsidiary initiatives. Secondly since the internal market initiative is inherently inward-looking the requirement for corporate approval for necessary resources is primary. Both horizontal and vertical selling of the process to build support is essential. Finally since internal market initiatives are fundamentally geared towards reconfiguation and rationalizing of the activity system in the MNC it needs to emphasise that overall revenue generating KPI's are not substantially affect in the short term by internal market initiatives. Internal market initiatives can be seen as symptomatic of an overall shift toward geographical concentration by value adding functions in MNC's (Birkinshaw 1997; 2000).
Birkinshaw and Ridderstråle (1999) identified two types of initiatives the first is internal and the second external using the locus of business opportunity as a distinguishing factor. An internal initiative is a reaction to an opportunity within the organisation. An external initiative targets an opportunity outside the boundaries of the corporation, within either local or global markets. They go on to explain that external initiatives often arise through interactions with bodies beyond the confines of the MNC. This brings about two important differences when compared with internal initiatives. Firstly, no other competitor subsidiary would lose out i.e. the outcome of the initiative is increased performance of the MNC via a new external opportunity. Secondly, whereas in internal initiatives the starting point of the activity is easily pin pointed, most external initiatives evolve incrementally. A decentralized approach to resource allocation was shown to facilitate this. The initiative, in its early stages circumvented the corporate immune system by essentially operating below the radar. Subsidiary managers driving these initiatives use their external contacts to develop the initiatives and present it to HQ as an almost completed project.
Birkinshaw and Ridderstråle (1999) found that resistance to initiative can come from three players, namely (a) individuals in the 'vertical' line of command, (b) competing divisions; and (c) other corporate units. The first manifestation was delay, rejection, or a request for greater justification by corporate managers to whom the subsidiary was accountable i.e. the vertical line of command.
Birkinshaw and Ridderstråle (1999) identified three areas of concern; the first is that the initiative had to demonstrate a higher than normal potential return on investment to mitigate the higher risk. The second is that the initiative had to fit with the corporations' strategies. Thirdly, the subsidiary had to show that it was the most suitable entity to take responsibility for the activity in question.
The artificial roadblocks mentioned above are a significant symptom of the not invented here (NIH) syndrome, this syndrome does not appear to have been subject to detailed academic analysis, as a result Birkinshaw and Ridderstråle (1999) draw from behavioral and sociological literatures. Three broad groupings of mindsets were outlined;
The first is ethnocentrism i.e. a blinkered view of their own national identity and a belief it their own superiority. Hedlund (1986) and Perlmutter (1969) maintain that this is typically a head-office trait of managers in larger countries and that a typical part of this belief is that foreign subsidiaries will adopt policies and technologies from parent country.
Birkinshaw and Ridderstråle (1999) also make a point regarding the historical performance of a subsidiary i.e. if a subsidiary is not know for initiatives in the past it is more difficult for them to gain purchase within the organisation. As a result HQ managers are inclined to reject initiatives on the basis that they had never associated the particular subsidiary with initiative in the past.
This demonstrates biases leading to head office managers screening out unfamiliar initiatives for example; conservatism (a preference for tried and tested solutions), and availability (a tendency to lean towards easily remembered experiences) (Schwenk, 1988). Birkinshaw and Ridderstråle (1999) describe the implication as;
'Corporate decision makers are essentially 'biased' in their judgments of initiatives, towards individuals or subsidiaries that have been successful before. These biases arise simply out of the need to process complex information in an efficient manner, and in that regard they are distinct from ethnocentric predispositions as discussed above.' (Birkinshaw and Ridderstråle, 1999, p.161)
The third category is 'resistance to change'. Resistance to change has been extensively studied (Coch & French, 1948; Kotter & Schlesinger, 1979; Lawrence, 1954; Watson, 1982). The most common form of resistance referred to by Kotter and Schlesinger (1979) as; 'parochial self-interest.' For example; a head office manager resisting due to a perception of the initiative as a threat to their personal livelihood or status within the corporation. A second form of resistance we observed was what Kotter and Schlesinger refer to as misunderstanding and lack of trust. This was most common when an initiative had to get broad-based support from large numbers of head office managers.
How a subsidiary deals with the resistance thrown up by the corporate immune system can have a critical effect on the achievement of a mandate, overtime a successful initiative taking subsidiary would expect to change its own strategic context (Burgelman 1983) and hence it's perceived role within the MNC. Birkinshaw (1996) recognises this role as a subsidiary mandate contending the mandate to be a business, or part there of, which the subsidiary has responsibilities towards and is a participant but is beyond its national market boundaries. The mandate is a license to utilise its distinctive capabilities for the particular business or market opportunity. The initial mandate, or raison d'etre, is of primary importance being the basis for the existence of the subsidiary.
Birkinshaw et al, (2005) contend that subsidiaries are started with the objective of being a market unit of the parent company, as the subsidiary grows it develops resources and capabilities of its own and takes on additional responsibilities by being innovative in the local market, and interacting with others in the local environment. This can eventually lead to uniqueness in its approach that not only helps the parent organization, but also drives the parent in a direction that was not considered initially. They further opine that in order to be held as superior when compared to sister subsidiaries the top management team of the subsidiary must constantly look for ways that will give them an edge over their internal competitors. Even when operating in an 'internal' competitive environment knowledge sharing across the different internal subsidiaries and parent should not be precluded as a normal activity.
Subsequently Birkinshaw (1996) and Delany (2000) hypothesize subsidiary mandate life cycles, Birkinshaw (1996) broadly classifying them as mandate gain, development, sustainability and loss which contrasts with Delany's (2000) basic, intermediate and advanced or 8 stage models. The development of new mandates sometimes involves venturing into a broader area through proactive lobbying with the parent, from where the concept of 'subsidiary initiative' springs in.
Delaney's (2010) 8 stage model though simplistic in presentation provides a stepping stone methodology illustrating how a subsidiary can slowly progress through different stages of development, finally reaching a stage where it becomes the 'strategic apex' of the corporate thereby establishing itself as an indispensible part of the whole corporate conglomerate of the MNC. This last stage could probably be termed as the goal of all the subsidiary initiatives as it gives the subsidiary an advantage that is beyond the comprehension of even head office, in effect a reverse takeover.
Building on these concepts we can view two distinct models of corporate entrepreneurship linked to subsidiary initiatives and subsidiary mandates. 'Focused corporate entrepreneurship' (Birkinshaw, 1997, p208) whose mandate is to identify and nurture new businesses and opportunites for corporations through semi-autonomous informally structured corporate venturing. Corporate head office will have already legitamised its existence and mandate.
The second model 'dispersed corporate entrepreneurship'(Birkinshaw, 1997, p209) entails intrapreneurship or every individual in an organisation having capacity for both managerial and entrepreneurial behaviour. The dispersed approach sees development of entrepreneurial cultures or posture as the key antededent to subsidiary initiatives. This in turn leads to a greater diversity of opportunities sensed due to dispersed capabilities throughout the organisation. Birkinshaw (2000) believes that initiative is the 'primary manifestation of dispersed corporate entrepreneurship' and 'the initiative process is bounded by the identification of an opportunity at the front end and the commitment of resources at the backend.' (Birkinshaw, 1997, p.209) breaking this down further foreign subsidiaries can be placed into groups with differing roles (Birkinshaw 2000).
The 'assigned' subsidiary mandate is legitimised by the parent company (Bartlett and Ghoshal 1986) and their role is enacted through the definition of an appropriate set of co-ordination and control mechanisms. This role is enacted through the structural context of the MNC can be said to have 'autonomy, local resources, normative integration and inter-unit communication associated with innovation creation in subsidiaries but a negative association with adoption and diffusion (Ghoshal and Bartlett 1988).
Contrasted with the 'assumed' subsidiary mandate where there is a greater strategic choice on the part of subsidiary management than the subsidiary role perspective. Subsidiary strategy is constrained by structural context rather than defined and local managers have considerable latitude to shape strategy as seen fit. Roles are assumed by subsidiary managers rather than assigned by parent company managers. With a role aligned to the dispersed approach to corporate entrepreneurship the subsidiary has ongoing managerial responsibilities but responds to entrepreneurial opportunities as they arise. Creativity and innovation is endemic to these subsidiaries as the driver of their strategy.
The mandate development function of a subsidiary that ultimately leads to subsidiary initiatives is a part of the 'autonomous bottom-up internal workings' Burgleman (1983). Complementing the 'autonomous bottom-up internal-workings' is the 'structural context' (Bartlett, 1979; Bower, 1986; Burgelman, 1983; Prahalad, 1976) of the subsidiary that consists of various facets of its relationship with the parent company. Ghoshal's (1986) research on innovation in large multinationals highlight the aspects of parent-subsidiary relationship in increasing the subsidiary's contributory role. He showed that the creation of innovation in subsidiaries was associated with high autonomy, high parent-subsidiary communication and high normative integration (similar parent-subsidiary behavioral patterns leading to integration). Often, subsidiary units are typically low in power which limits both their freedom and autonomy to make changes and their achievement of visibility in head office. The incumbent structure of organisations tends to favor ideas developed in high-power parts of the organization at the expense weaker elements (Burgelman and Grove, 1996; Hamel, 1996).
This can lead to an attack by the corporate immune system, Birkinshaw and Ridderstråle (1999) state:
'The organization (in its totality) will often view subsidiary initiatives with suspicion or hostility. It seems there are disparate forces at various levels and locations within the organization that act to suppress subsidiary initiatives with the result that many efforts probably do not come to fruition. This is because the merits of any given initiative cannot be known in advance, so the expectations of actors within the organization of its likely value is such that they would prefer to make a type 1 error (reject a promising initiative) than a type II error (let through a rogue initiative). This may, in fact, be the correct side to err towards if one is going to err at all, but it does mean that many promising initiatives are probably lost.' (Birkinshaw and Ridderstråle, 1999, p.150)
Birkinshaw (1996) propounds that even though subsidiary mandate is not exactly the same as innovation creation they do share a similar set of relationship with respect to creation of autonomy within the boundaries of the parent-subsidiary communication channels that comes under the purview of normative-integration.
The other important factors that leads to world mandate winning strategy for the subsidiary includes credibility of the subsidiary in delivering on its promise, (Bishop and Crookell, 1986), cross-fertilization of ideas (Hedlund, 1994), an internal context that fosters co-operation, initiative and learning (Ghoshal and Bartlett, 1994) which in turn leads to entrepreneurship inside a subsidiary sometimes called as intrapreneurship (Jong and Wennekers, 2008).
Subsidiary value-additive makes a subsidiary very significant in the corporate context. The different factors that lead to value-additives for the subsidiary are resource inflows and outflows (Gupta and Govindarajan, 1991), strategic importance of the subsidiary (Bartlett and Ghoshal, 1986), international sales, level of integration with the parent company and existence of world mandate with the subsidiary (Roth and Morrison, 1992).
Delving on the issue of mandate loss, which at its extreme could lead to the closure of the subsidiary vis-à-vis parent, Birkinshaw (1996) contends that it can occur mainly due to Subsidiary-Led Spin-Off, Parent-Driven Phase-Out, and Subsidiary-Driven Divestment (Birkinshaw, 1996). Each of these outcomes would lead us to theorize that subsidiary mandate from the parent is the primary foundation on which the subsidiary initiatives can occur, that if properly executed can lead to subsidiary becoming a strategic apex in the corporate conglomerate.
Subsidiary initiatives are delicate, played out strategically over a period of time, trying to advance the parent companys commitment to it. This long lasting approach has an impact on the way relationships within the greater MNC are conducted (Birkinshaw 2000).
Birkinshaw (2000) more specifically proposes five sequence of steps that underly how initiatives influence the mandate development process. Firstly 'subsidiary-level learning'provides feedback of considerable value whether or not the initiative proves successful or not. This learning provides input into future strategy especially during planning for the next initiative. Next 'subsidiary learning as a sense-making process' which provides fundamental reasons for future strategies by interpreting the past.Weick (1979; 1987) reasoned that what worked historically may work strategically in the future, since strategy creates vision which in turns enables action, and action is all important. Thirdly 'subsidiary-level capability development' but only if the capabilities are of value to the MNC, subsidiary specific capabilities must be positioned to ensure the parent depends to some degree on them, and can be rapidly developed. Development and stretching have the added benefit of impacting organisational behaviour and inspiring subsidiary motivation.
Fourthly 'enhancements to the parent-subsidiary relationship' an essential influencing factor of initiative success, requiring intensive intrapreneurship, sometimes based on personal relationships between subsidiary and head office managers. Supporting a geocentralised approach by head office managers is a byproduct of credible parent-subsidiary relationships. Finally 'corporate level learning and adjustment' though the most demanding to successfully perform culminates in the enhancement of the status of the subsidiary and its standing within the MNC structural context. Burgelman (1983) propends that over the year's subsidiary initiatives can lead to changes in a subsidiaries structural context and further enhance its strategic context within the MNC.
In-Depth interviews are:
Conducted on a one-to-one basis
Unstructured, may attempt to follow a rough outline, the actual wording/order of the questions depends on the respondents answers
Direct way of collecting information
Discursive, allows the researcher and respondent to explore an issue
In-depth interviews are appropriate when:
Intensively probing needs behaviour or attitudes
Eliciting confidential personal data
Detailing socially acceptable norms
Understanding complicated decision-making patterns
Interviewing professional people
Help to overcome
Hectic Schedules
Heterogeneity
Live context
Interviewer reflection
Preparation:
Define the purpose of the interview
Prior to the interview, must define what information is required
The information supplied by the interviews must clearly relate to specific questions the research seeks to answer
In-depth interviews are structured
Highly skilled interviewers may appear not to be systematic, yet all interviews require a format and follow a process
Free-form interviews may be used in the problem definition phase but in the hands of the inexperienced may be unsatisfactory
Conducting the interview:
Interviewing is never haphazard. It is deliberate and focused on the respondent. May take from 30 minutes to an hour and a half
Initiating the Interview
After introductory pleasantries, confirm the general purpose of the research
Approximate the time required
Taping the Interview
A taped interview serves several purposes:
Always ask permission to tape
Offer to stop taping on request
Indicate that the recorder is there to ensure that information is accurately reported
Some instances may be too sensitive to allow any taping
Never tape without permission - unethical
Interview techniques
The respondent must do 90% of the talking
Begins by asking general questions and then uses a more unstructured format
Probes for more information
What do you mean by that?
Would you elaborate on that?
Can you give me an example?
Can you be more specific?
What else?
The interviewer should:
Develop empathy
Ensure the respondent is relaxed and comfortable
Be personable
Develop areas of interest
Not accept 'yes' or 'no' answers
Note areas that need further probing
Take brief notes
Provides the interviewer with something to do while the respondent formulates an answer
Indicates to the respondent that their words are important
Return to incomplete points
Repeat key questions throughout the interview, do not repeat exactly but use oblique references to encourage respondents to reveal additional facets of a key issue
Use creative allusions
'Some people have told me that…………..' 'What do you think?' are very useful in getting respondents to open up
Speculation can aid reluctant respondents in opening up
'I'm not sure, but could it be that…?' is another useful way to open a line of questioning
Sometimes statements which suspected to be false are used to confirm facts
Conclude interviews with general questions
Is there anything further that you feel is important?'
Be alert
Even when the tape recorder is turned off the interview is not necessarily over
Critical information may be revealed in the few moments farewell
Interview report
Summarise the interviews while they are still 'fresh'
Credibility can be raised if a summary of the interview notes are shown to the respondent for approval. This confirms the accuracy of notes and reports and that error is not introduced
Selective quoting adds to the credibility of the report
Must obtain permission to quote
Intreviewer role
Should avoid appearing superior and put the respondent at ease
Be detached and objective, yet personable
Ask questions in an informative manner
Not accept brief yes or no answers
Probe the respondent
Advantages
Can uncover greater depth of insights than focus groups
In-depth interviews result in free exchange of information that may not be possible in focus groups
Disadvantages
Interviewer bias
Quality and completeness of the results depend heavily on the interviewer's skills
Difficult to analyse and interpret the data obtained
Number conducted tends to be small
Often poorly executed and inadequately reported
â-¦Research questions and objectives
The project objectives occur as themes relating to subsidiary initiatives viewed from a foreign subsidiary manager's perspective.
To understand the formation and mechanics of the innovation process in three Ireland based subsidiaries along the context of:
How successful or failed subsidiary initiatives come about
What impact these have on the subsidiaries mandate
What experience subsidiary managers had with 'push back' from head office managers on their subsidiary initiatives
Themes:
A: Fit into MNC
Strategic / mandate / product or service
B: Initiatives (+ve and -ve)
Describe / main drivers
C: Subsidiary Capabilities (increase/decrease) as initiatives progress
D: Relationship with HQ and sisters
(Power / autonomy / knowledge transfer)
E: Contributors to gain/development/loss of mandate
F: Leadership style
Management style / entrepreneurial / chasing markets
Questions:
Please outline how your subsidiary fits into the overall Multinational corporation organisation.
(Linked question) would you describe this situation as operating within the legitimate mandate as prescribed by the parent company.
How did your subsidiary build its existing capabilities?
(linked question) has this lead to an increase in resources/power/products
Could you describe an initiative, something instigated by senior subsidiary management that provided you with additional responsibilities/product/services/resources and was beyond the local market, that the subsidiary took that have a positive impact on its mandate
Points to extract from interviewee
How was opportunity pinpointed
How was support gathered
Level of risk
At what point was it brought to HQ's attention & their reaction
Any blockers
Source / nature
Egocentrism vs. geocentricism
Resistance to change
Parochial self interest
Misunderstanding
Not invented here
Was it legitimised
Could you describe an initiative, something instigated by senior subsidiary management that provided you with additional responsibilities/product/services/resources and was beyond the local market, that the subsidiary took that have a negative impact on its mandate
Points to extract from interviewee
How was opportunity pinpointed
How was support gathered
Level of risk
At what point was it brought to HQ's attention & their reaction
Any blockers
Source / nature
Egocentrism vs. geocentricism
Resistance to change
Parochial self interest
Misunderstanding
Not invented here
Was it legitimised
Did it impact on the subsidiaries mandate or strategy
Has knowledge from previous initiatives influenced the subsidiaries strategy
(linked question) have you shared with knowledge with HQ or sister subsidiaries
(linked question) has HQ or sister subsidiaries shared similar knowledge with your subsidiary
How would you describe your working relationship with headquarters? Why?
(linked question) could you describe your relationship with sister subsidiaries
(Linked question) if there is a difference could you give a rational why?
Do you compete with sister subsidiaries for products or services
(linked question) in your opinion how can a subsidiary differentiate itself
What in your opinion are the main contributors for improving your subsidiaries mandate
To what extent does your subsidiary have the freedom to act independently of headquarters?
How would you describe your subsidiary contributing unique value to the MNC
To what extent does your subsidiary actively seek out new mandates?
(Linked question) Can you describe any new mandate which you actively sought
Can you describe the level of autonomy you have to drive local entrepreneurial initiatives?
(linked question) could you expand this to any global or internal initiatives?
In your view what are the main facilitators of subsidiary initiative
In your view what are the main facilitators that push against subsidiary initiatives
How important (or not) is leadership style when it comes to providing a supportive environment for subsidiary initiatives? (Why?)
How do you ensure your organization remains flexible and responsive to local market demands?
How do you promote/enhance your subsidiary's significance within the global MNC network?
How would you describe the strategic relationship between headquarters and your subsidiary?
(linked question) how has this relationship developed over time?
The parent - subsidiary relationship, the main area of attention in this theme will examine how the three arrangements in focus deal with subsidiary initiative. Birkinshaw and Riddersträle (1999) define this as 'any initiative that occurs outside the home country of the MNC.' An innovation process or NPD activity can be regarded as an initiative.
A key factor is; the subsidiary's' power and influence in the initiative process. Birkinshaw and Riddersträle (1999) state that the idea of power in this case can be broken down into 2 forms. Firstly; Structural power (i.e. legally granted authority, usually manifested through the control of; work processes, output, norms, belief systems, planning, objectives and informal systems such as; meetings, agendas, information flow etc.) and finally; Resource based power (i.e. control over valuable assets on which others depend and knowledge.)
Notably Birkinshaw and Riddersträle (1999) refer to 'the corporate immune system', they go on to say; 'from an entrepreneurial or power perspective, it can be expected that subsidiary initiatives will encounter significant resistance from the existing power bases within the corporation'. Zahra et al. (2000) propend; that it is well established that creation-orientated activities tend to be driven out by exploitation-orientated activities. This raises the question; do the people in a position of power have an exploitation-orientation?
Building on the theme of corporate context, Zahra et al. (2000) suggest that, regarding MNC's; 'global subsidiary mandates and control systems is an important determinant of subsidiary entrepreneurship…..that the local environmental context comprising dynamism, hostility, and complexity influences a subsidiary's future entrepreneurship.' A global subsidiary mandate defines the role and objectives of the subsidiary and the scope of its operations (Pearce, 1992).
The key factors to be considered when discussing subsidiary mandates are as follows; does the subsidiary play a dominant role in making decisions about the products to be made and the markets to be covered (Roth & Morrison, 1992), in other words, does the subsidiary have autonomy?
Autonomy is a prominent area of focus when addressing corporate context. Prahalad and Doz (1987) observe that 'innovation and entrepreneurship tend to flourish when arrangements allow for freedom to act. This presents the question; are the subsidiaries free to act on their own?
The autonomy question advanced the notion of strategic control. Cray (1984) postulate that MNC's have to balance the autonomy they grant their subsidiaries against the corporate need for integration and coordination. This is an important area of consideration as control systems typically reflect MNC's dominant values and cultures and, as a result can influence the behaviours of subsidiary managers (Hellund, 1986). Barringer and Bluedorn (1999) hypothesise a positive relationship between the use of strategic controls and a firms entrepreneurship, building on this they reason that strategic controls 'are capable of rewarding creativity and the pursuit of opportunity through innovation'.
Furthermore research relating to the use of financial controls advances the notion that such controls usually tie managers' compensation to the achievement of specific short-term performance goals and consequently, managers are less likely to take risks (Hoskinsson et al. 1991).
Building on the theme of local environmental context researchers have observed that firms which compete in turbulent environments are more likely to be entrepreneurial than firms in stable environments (Barringer & Bluedorn, 1999). Zahra et al. (2000) describes environmental turbulence as being characterized by; perceived dynamism (i.e. the changes that occur in a subsidiary's environment because of technological or market shifts), hostility (i.e. unfavorable changes in the local market through the proliferation of rivals) and complexity (i.e. perceived diversity of needs of the different customer groups that the subsidiary serves).
â-¦Research Method
Items to cover:
Research approach
Data collection technique
Rational for indepth interviewing
The interview
Planning and admin for interview
Pilot interview
Role if interviewer (careful questioning, good listener, interview effect)
Sampling
Sample unit
Sample frame
Sample technique
Sample size
We are looking to understand the rich experiences of subsidiary managers under specific objectives. This aligns itself to the process of conducting qualitative research in the form of in-depth interviews working towards having the themes be the driving forces behind the interview structure and subject matter.
The qualitative method of using a semi-structured in-depth interview was chosen because the research topic was subjective and the researchers did not want to narrow the subjective element of the topic by containing the answers within a questionnaire format. Quantitative methods like surveys which normally consist of carefully worded, closed-ended, questions can minimize the depth of subjectivity (McNamara, 1999).
Qualitative method allows for opportunities for the subjective meaning to be clarified more than specific answers to questions. With the direction from the researcher only coming within the sub-themes that are related to the research question and then allowing for the discussion to be determined by the participant (Greenstein, 2006). This approach to cover both a factual and a meaning level, though it is usually more difficult to interview on a meaning level. (Kvale, 1996). Building on these interviews is particularly useful for probing to establish a deeper understanding behind a participant's experiences. The interviewer can pursue in-depth information around the topic. (McNamara, 1999).
Hague (1993) contends in-depth interviewing or unstructured interviewing is based off a itemized list of items unlike formalized questioning and this free ranging approach can be rewarding for the interviewee and the interviewer. In-depth interviewing may bring researcher limitations to the fore since this technique requires advanced knowledge and extreme confidence on the behalf of the interviewer to maintain control of the flow, since the researchers are limited in their experience of this methodology it may be a limited factor in the research. Pilot interviews will take place to increase individuals experience and observe any improvements requirement before moving to the live phase.
â-¦Research Timeline
Task
Tentative Dates
Prepare proposal by
2nd March 2011
Ethical Clearance
End of March 2011
Complete literature review
4th April 2011
Feedback meeting with advisor
14th April 2011
Pilot phase of fieldwork
End of April 2011
Recruitment of participants
Start of May 2011
Commencement of fieldwork
Mid-May 2011
Completion of fieldwork
Start of June 2011
Completion of analysis
Mid-August 2011
Project submission
16th September 2011
Reflective learning report submission
30th September 2011
Project presentation
5th October 2011
â-¦Resources
Participant numbers will be equally matched from each subsidiary, a minimum of 4 interviews per subsidiary will occur. Patton (2002) provides justification for intensity sampling asserting 'an intensity sample consists of information-rich cases that manifest the phenomenon of interest intensely' (Patton, 2002, p.234).
Participants will be deemed suitable only if they communicate bi-weekly with the head office of the MNC and have participated in the formation and/or mechanics of the innovation process.
â-¦Ethical Clearance
The research will be detailed anonymously and people are recruited through voluntary participation. Details of purpose and use of research will be given to all possible participants prior to consenting to take part. The researchers will seek both written and oral consent, asking after explaining the purpose and use of research again to the participant if they should wish to continue with the interview and that this wish to continue in only given orally as suggested by De Vaus (2002) demonstrates consent.
Contact details of researchers will be given to allow for any clarification regarding the research during the process. Exiting from the research project at any time will be an option for participants and will be explained before agreeing to participate. Confidentially of participants will be maintained with no description or link to their identity revealed within the writing up of the research. Storage of the research will remain with the researcher and DIT. The participants have a right to read the findings of the research.
