Characteristics of Foreign Subsidiaries in Industry Clusters (2000)

Abstract

It is well established that the roles of foreign-owned subsidiary companies (i.e. the activities that they have responsibility for in the multinational corporation) vary according to such contingencies as the local environment (Ghoshal and Nohria, 1989), the structural context imposed by the parent (Gupta and Govindarajan, 1991), and the entrepreneurial capacity of subsidiary management (Birkinshaw, 1997), to name some of the most well-known factors. In this paper we examine another potentially important predictor of varying subsidiary roles – the membership (or not) of a leading-edge industry cluster. An industry cluster can be defined broadly as an aggregation of competing and complementary firms that are located in relatively close geographical proximity. In this paper we focus on those ‘leading-edge’ clusters identified by Porter (1990, 1998) and operationalised in terms of high export intensity.

Journal of International Business Studies, 31 (1) (2000), 141–54. This paper benefited greatly from seminars given at the Institute of International Business and the Invest in Sweden Agency, and a presentation at the Academy of International Business annual meeting, Monterrey, Mexico, October 1997. Thanks to Örjan Sölvell, Rod White, Alan Rugman and Don Lessard for their comments and advice.