A Microfoundations Approach to Understanding Subsidiary Manager Types

INTRODUCTION Subsidiary contribution relies on key individuals within organisations to prioritise or give their energy and attention (Birkinshaw et al., 2007; Bouquet et al., 2011) to building linkages for accessing knowledge... [ view full abstract ]

INTRODUCTION

Subsidiary contribution relies on key individuals within organisations to prioritise or give their energy and attention (Birkinshaw et al., 2007; Bouquet et al., 2011) to building linkages for accessing knowledge and opportunities (Cano-Kollmann et al., 2016; Schotter et al., 2011). To date however, the rich subsidiary literature has largely overlooked the individual activities and interactions required by subsidiary managers to build crucial linkages and access vital knowledge (Lorenzen et al., 2013). This paper addresses this issue and takes a microfoundational approach to develop a typology of subsidiary manager’s attentional engagement on key strategic activities. The findings illustrate the importance of the individual and confirm how different subsidiary manager types impact on the contribution of their subsidiary unit at the MNC middle management level.

RESEARCH QUESTION

Our research question asks what strategic activities engage the attention of subsidiary managers? Based on this we can analyse if there are subsidiary manager types? 

METHOD

Given the comparatively modest number of subsidiaries in Ireland relative to some of its geographic neighbours, the entire population was included in the study avoiding issues of potential external validity (Bettis, 1991; Hubbard et al., 1998; Short et al., 2002) and potential problems in sampling design such as systematic biases (Short et al., 2002). The most reliable informant for our study was the most senior manager in the subsidiary, the subsidiary CEO, from both a theoretical and practical perspective. The number of cases considered by this research was 186, and as loadings on components are high, this comfortably meets acceptable levels. As the diagnostic tests confirm the suitability of the data for factor analysis the process was executed and the results were examined to assess the discriminant validity of the variables. Managers are then categorised into different clusters based on the mix in their attentional engagement across the four activities being studied.

DISCUSSION

Despite growing scholarly interest and recognition of the importance of understanding what middle managers do within complex organizations, there are still important gaps in our knowledge. In response we, have analysed the strategic activities of subsidiary CEOs as MNC middle managers, allowing us to make two important contributions to theory. The first contribution from this research is to develop an extensive microfoundational framework of subsidiary manager strategic activities, confirming wider boundary spanning both inside and outside the organization. We provide an in-depth understanding of these horizontal boundary spanning activities. Existing typologies of middle managers draw exclusively from top management and deliberate strategy, which, while providing a useful reference point has led to a focus on strategy as a vertical continuum from top to bottom in organizations. While acknowledging middle managers as important mediators across organizational boundaries (Aherne et al., 2014; Balogun et al., 2004; Bartlett et al., 1993; Floyd et al., 1997) there are still too few studies (Balogun et al., 2011; Rouleau, 2005; Rouleau et al., 2011) that investigate how middle managers actually manage the horizontal flows of strategy and renew intraorganizational and external relationships. This study represents a significant step towards addressing this oversight, providing a strong theoretical framework for further exploration. The nature of these activities both inside and outside the firm underpin two crucial aspects of the development of competitive advantage in the modern MNC. The competitive advantage of MNC is based on their ability to access and match knowledge and expertise in the internal and external environment. Managers are required to integrate within these environments but also engage in activities which lead to innovation. The strategic interface between the external and internal MNC environment is manned by the subsidiary CEO. This research demonstrates that through a more in-depth understanding of the strategic actions of subsidiary managers, these individuals can become a key organizational resource in developing firm specific advantages.

The second contribution of this study is to substantiate how subsidiary CEOs focus their attention on different strategic activities to achieve different subsidiary goals. This enables us to propose a typology of subsidiary manager types based on their allocation of their most crucial cognitive resource. This is a major insight into how subsidiary managers, at the individual level, balance the three key dilemmas in the headquarters subsidiary relationship. Despite the rich MNC literature, insights to date on how subsidiary CEO’s respond to these critical dilemmas had remained fragmented. Identifying different types of subsidiary manager’s approaches to strategic activities within the MNC brings together existing research and provides a rich theory for future studies.

REFERENCES

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