Academic journal article Management International Review

Technology Sourcing and the Strategic Roles of Manufacturing Subsidiaries in the U.K.: Local Competences and Global Competitiveness

Academic journal article Management International Review

Technology Sourcing and the Strategic Roles of Manufacturing Subsidiaries in the U.K.: Local Competences and Global Competitiveness

Article excerpt

Key Results

* A widening of their sources of technology inputs underwrites creative roles in subsidiaries, but this usually remains within the established technological trajectory of the group.

Introduction

The new competitive conditions of the global economy demand that MNEs adopt a genuinely decentralised perspective on not only the use of their technological and managerial competences (the way they are applied), but also on the way they are generated. This development involves a thorough redefinition of the roles of overseas subsidiaries in the process of modernising the competitive organisation of the MNE.

Whilst the demand situation facing subsidiaries has become more intense and distinctive, their supply situation has also developed increasingly original conditions which allow them the opportunity to acquire competences within their MNE group. Rising incomes, in many host countries have allowed for the rise of more discriminating, and less submissive, consumer tastes, manifested through an increasing demand for national or regional products. The strengthening of indigenous industry in many host countries, alongside the emergence of new MNEs (from Japan and similar countries) made the industrial environment vastly more competitive. This increased diversification of tastes and emergence of new forces of competition was reinforced by the generation of managerial and other skills, and in particular of technological capacities and specialised competences, in an increasing range of countries, which therefore became available to MNEs' subsidiaries in these countries. Thus creative subsidiaries are increasingly allocated extensive responsibilities to develop their own original capacities in order to supply effectively their own, n original and distinctive markets (which are now likely to extend beyond their host country).(1)

Central to the emergence of such creative subsidiaries is the development of their own technological capabilities within the portfolio of technologies available to the group, in achieving this the subsidiary will build up a certain degree of technological capacity within its own operations (i. e. a R & D laboratory or an engineering unit) but may also establish collaborative arrangements with other elements in the host-country science and technology base. In this way the technological profile of a creative subsidiary will reflect the distinctive specialised technological capacities of the country in which it is located. This, in turn, represents a realistic view of the need for a MNE to take advantage of all the technological opportunities available to it throughout its global operations, in order to generate and retain competitive advantages.

These perspectives on contemporary MNE operations are investigated in this paper through an analysis of replies to a questionnaire survey sent to manufacturing subsidiaries of foreign companies operating in the U.K.(2) In total the questionnaire was sent to 812 such subsidiaries with satisfactory replies being received from 190 of them.(3) In the next section evidence is provided on the relative prevalence of four different types of subsidiary role. The third section evaluates the importance in these subsidiaries' operations of seven different sources of technology, and relates their relative position to the roles played by the subsidiaries.

Roles of Subsidiaries

Respondents to the questionnaire were asked to evaluate the importance of four possible roles in their operations as being either `our only role', `our predominant role', `a secondary role', or `not a part of our role'. Overall 39 indicated that they focused on a unique role, whilst 216 evaluations of particular roles as being predominant ones were provided. The latter number reflects the reluctance of some respondents to separate two roles in terms of the lead (predominant) position in the subsidiary's overall operations. …

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