Unlocking Ideas at MNC Subsidiaries : A Study on the Acceptance of Subsidiary Initiatives in MNCs

Abstract: Through an extensive literature review it was concluded that there is a substantial lack of understanding of headquarters’ approval processes of foreign subsidiary initiatives. This study thus adds to the extant research on subsidiary initiatives, which is still a rather unexplored and theoretically fragmented field of study. Research within the subsidiary initiative stream of literature suggests that subsidiaries themselves should take an entrepreneurial stance and come up with “initiatives” to get recognition and leverage their unique capabilities. Accordingly, researchers have argued that subsidiaries should develop and present subsidiary initiatives in order to get their resources and capabilities recognized and leveraged into firm-specific competitive advantage. The purpose of this study was to identify and investigate the underlying conditions behind headquarters’ acceptance or rejection of initiatives originating from MNCs foreign subsidiaries. Within this overall aim we have developed and assessed a new quantitative measurement instrument that identifies important issues related to (1) Headquarter Attention, (2) Headquarter– Subsidiary Relationship, (3) Subsidiary Power and (4) Subsidiary Initiative-Selling. This study contributes to both academia and practice by providing a richer understanding of why some subsidiary initiatives are approved while others rejected. From the findings, we can conclude that, of the conditions examined, the degree of subsidiary power and how the subsidiary frame and present the initiative to headquarters have a significant impact on headquarters acceptance of submitted subsidiary initiatives. Additionally, we have successfully created a measurement instrument and quantified the concept of subsidiary initiative-selling as one identified determinant related to the headquarters’ acceptance of submitted subsidiary initiatives, which has not been done before. Moreover, we have found that there is a correlation between initiative-selling and initiative acceptance by headquarters’, this is yet a contribution in itself.