The microfoundations of subsidiary initiatives: How subsidiary manager activities unlock entrepreneurship

• Author: Na Fu,Tina Ambos,Pamela Sharkey Scott,Dónal O'Brien,Ulf Andersson
• Published date: 01 February 2019
• DOI: http://doi.org/10.1002/gsj.1200
• Date: 01 February 2019

SPECIAL ISSUE ARTICLE

The microfoundations of subsidiary initiatives: How

subsidiary manager activities unlock

entrepreneurship

Dónal O’Brien

1

| Pamela Sharkey Scott

1

| Ulf Andersson

2,3

| Tina Ambos

4

|

Na Fu

5

1

DCU Business School, Dublin City University,

Glasnevin, Dublin 9, Ireland

2

School of Business, Society and Engineering,

Mälardalen University, Västerås, Sweden

3

Department of Strategy and Entrepreneurship, BI

Norwegian Business School, Norway

4

Geneva School of Economics and Management

(GSEM), University of Geneva, Switzerland

5

Trinity Business School, Trinity College Dublin,

The University of Dublin, Dublin 2, Ireland

Correspondence

Dónal O’Brien, DCU Business School, Dublin

City University, Glasnevin, Dublin 9, Ireland.

Email: donal.obrien@dcu.ie

Funding information

Dublin Institute of Technology; Irish Government

Research Summary: We use a microfoundations lens to

challenge the assumption of a simple relationship

between organizational-level context (subsidiary entrepre-

neurial orientation) and entrepreneurial outcomes (initia-

tive realization). Drawing on middle manager and

subsidiary literature, we argue that the strategic activities

of the subsidiary’s central actor, the subsidiary CEO

(referred to as the subsidiary manager), translates the ben-

efits of subsidiary entrepreneurship for initiative realiza-

tion. We test this mediating effect of subsidiary manager

micro-level activities on data from 186 individuals. The

results of our multilevel mediation analysis show that

micro-activities of subsidiary managers mobilize subsidi-

ary entrepreneurship for initiative realization, “down-

ward”through facilitating subsidiary adaptability and

“horizontally”through enabling embeddedness in the

local environment. Our findings also challenge the

accepted value of “upward”championing alternatives.

Revealing the centrality of subsidiary manager activities

for unlocking entrepreneurship demonstrates the value of

adopting a microfoundations lens for understanding orga-

nizational phenomena.

Managerial Summary: Multinational companies

(MNCs) increasingly expect their subsidiary units to con-

tribute through realizing initiatives, such as new product,

service, or process designs. Such outcomes are encour-

aged through a supporting organizational context for

entrepreneurship. But to understand how an entrepreneur-

ial context translates into realized initiatives demands that

we apply a microfoundations lens and consider the

Received: 31 May 2016 Revised: 6 October 2017 Accepted: 2 November 2017

DOI: 10.1002/gsj.1200

Copyright © 2017 Strategic Management Society

66 wileyonlinelibrary.com/journal/gsj Global Strategy Journal. 2019;9:66–91.

activities of the subsidiary’s central actor, the subsidiary

chief executive officer—referred to as the “subsidiary

manager.”The subsidiary manager is responsible for

mobilizing the subsidiary to develop relationships to

access the knowledge, ideas, and opportunities implicit in

the initiative process. Revealing the impact of these

micro-activities advances our understanding of how to

liberate the benefits of entrepreneurship for realizing ini-

tiatives. This study offers key insights for both subsidiary

managers and headquarters.

KEYWORDS

entrepreneurship, initiative, microfoundations, middle

manager, subsidiary, subsidiary CEO

1|INTRODUCTION

The competitive advantage of multinational corporations (MNCs) relies on their superiority in

exploiting new developments and innovations generated by subsidiaries across the internationally

distributed organization (Bartlett & Ghoshal, 1989; Burgelman, 1983; Cantwell & Mudambi, 2005;

Contractor, 2013; Kogut & Zander, 1993; Mudambi, Mudambi, & Navarra, 2007). The challenge

for MNCs, however, is to bring together the diverse potential between headquarters, subsidiaries,

and the local environment. In particular, the underlying specializations and contextual sensitivities

(Tippmann, Sharkey Scott, & Parker, 2017) make it difficult for managers at the subsidiary level to

develop and realize entrepreneurial initiatives that contribute to the MNC’s strategy and create value

for the organization as a whole (Ambos, Andersson, & Birkinshaw, 2010; Birkinshaw, 1997).

The rich subsidiary literature assumes that variations in subsidiary success at initiative realization

largely reflect the entrepreneurial context of the organization (Birkinshaw, 1997, 1999; Reilly &

Sharkey Scott, 2014; Strutzenberger & Ambos, 2014). Despite acknowledging the importance of

subsidiary management (Birkinshaw, Hood, & Jonsson, 1998) and heightened awareness of the con-

tribution of key individuals (Felin & Foss, 2005: Felin & Hesterly, 2007; Felin, Foss, & Ployhart,

2015), studies of subsidiary entrepreneurship are largely at an aggregate organizational level. While

recognizing that opportunities for initiatives are accessed through interactions both within the orga-

nization (Schotter & Beamish, 2011; Watson O’Donnell, 2000; Williams & Lee, 2011) and with the

external environment (Andersson & Forsgren, 1996; Andersson, Forsgren, & Holm, 2002; Birkin-

shaw & Lingblad, 2005; Marx & Lechner, 2005), the activities of central individuals in such interac-

tions are crowded out (Schmid, Dzedek, & Lehrer, 2014; Strutzenberger & Ambos, 2014) in favor

of largely aggregated explanations of initiative realization within the MNC.

Those studies that do consider the impact of individual activities suggest that the subsidiary

CEO, hereinafter the “subsidiary manager,”is pivotal to subsidiary-level outcomes, with roles in

conflict resolution (Schotter & Beamish, 2011) and politics (Dörrenbächer & Geppert, 2009), and as

a crucial connector with the external environment (Cano-Kollmann, Cantwell, Hannigan,

Mudambi, & Song, 2016; Lorenzen & Mudambi, 2013; Schmid & Schurig, 2003). However, mod-

est attention is paid to explicating the impact of their day-to-day activities and interactions in meet-

ing the complex managerial agenda of the MNC (Mudambi, 2011; Schmid et al., 2014). This is

O’BRIEN ET AL.67