Influence of Internal and External Factorson Expansion Strategy : -Swedish Cleantech Subsidiaries in the US

Abstract: ABSTRACT Title: Influence of Internal and External Factors on Expansion Strategy-Swedish Cleantech Subsidiaries in the US Authors: Jungmin Choi, Maria Mogyoro Purpose The purpose is to contribute to the knowledge regarding internal and external factors‟ influence on the expansion strategy of a foreign subsidiary in a growing market. Design/Methodology/Approach Originating from the resource-based view and industrial organization view literature, an analysis model is developed. The model shows influences of internal and external factors on a subsidiary‟s expansion strategy. Propositions were formulated based on the analysis model and five case studies of Swedish clean technology subsidiaries operating in the US were compiled. Findings This study found that high business relatedness between a subsidiary and parent firm are positively associated with a broad market scope and differentiation strategy. Secondly, international experience is positively associated with a differentiation strategy. The study also found that perceived competition is positively associated with a broad market scope and perceived low competition influences a narrow product/market scope. Finally, perceived barriers positively impact a differentiation strategy. Implications This study provides evidence that both internal and external factors have an influence on a subsidiary‟s expansion strategy. The study also showed that there were linkages among factors. For example there were indications that external factor such as competition affects business relatedness. Hence, a revised model was developed demonstrating those relationships. For managers this research has importance since it has been shown that managers need to consider both the external and internal factors when they formulate strategy. Originality/value By integrating insights from the resource-based view and industrial organization view literature, this thesis develops a unique analysis model where factors from both schools are used to study expansion strategies of subsidiary firms in a growing market.