Configuration and Coordination at Subsidiary Level: Foreign Manufacturing Affiliates in the UK
| DOI | http://doi.org/10.1111/1467-8551.00102 |
| Published date | 01 December 1998 |
| Date | 01 December 1998 |
| Author | James H. Taggart |
Introduction
In recent years increasing attention has been
focused on the interface between the multi-
national corporate headquarters and its foreign
subsidiaries (Hedlund, 1981; Gates and Egelhoff,
1986; Roth and Morrison, 1992); in particular,
the question of how the subsidiary evolves and
implements its strategy has been the subject of
much conceptual and empirical work (White and
Poynter, 1984; Young, Hood and Dunlop, 1988;
Birkinshaw and Morrison, 1995). Two dominant
models of international corporate strategy have
been developed, within the dimensions of which
much research on subsidiary strategy has been
located. The first of these is the integration-
responsiveness framework proposed by Prahalad
and Doz (1987) following initial work carried out
individually (Prahalad, 1975; Doz, 1976). Accord-
ing to this approach, multinational corporations
(MNCs) develop competitive strategy across two
dimensions – how the firm integrates activities
across its international network to gain scale
efficiencies, and how it responds to local needs
in specific countries. This framework has been
subject to thorough empirical testing (Roth and
Morrison, 1990; Johnson, 1995), has also been
extended as a tool for analysing strategy at sub-
sidiary level (Jarillo and Martinez, 1990; Taggart,
1997). Jarillo and Martinez suggest three strategy
prescriptions corresponding to three of the four
quadrants of the model: active subsidiary, autono-
mous subsidiary and receptive subsidiary. Taggart
amends and extends this to a strategy prescription
in each quadrant: constrained independent, autono-
mous subsidiary, receptive subsidiary and quies-
cent subsidiary.
The second dominant corporate strategy model
has been proposed by Porter (1986), which also
has two dimensions: configuration of value-chain
British Journal of Management, Vol. 9, 327–339 (1998)
Configuration and Coordination at
Subsidiary Level: Foreign Manufacturing
Affiliates in the UK
James H. Taggart
Strathclyde International Business Unit, Department of Marketing, University of Strathclyde,
Glasgow G4 0RQ, UK
This paper develops Porter’s (1986) well-known configuration/coordination paradigm
for strategy at corporate level into a model that may be applied to identify and evaluate
strategy at subsidiary level. Four strategy types are identified: detached subsidiary (cor-
responding to Porter’s export-based corporate strategy), autarchic subsidiary (corres-
ponding to the country-centred corporate strategy), confederate strategy (corresponding
to high foreign investment with extensive coordination), and the strategic auxiliary
(purest global strategy). Empirical data were obtained from a postal survey of 500
randomly chosen foreign manufacturing affiliates in the UK, of which 171 responded.
The proposed strategy types were identified using cluster analysis and verified using
analysis of variance. The four subsidiary strategy types were found to be separated by
a number of operational variables including market scope, flows of material inputs and
outputs, the nature of manufacturing technology employed and the degree of R&D
complexity. The proposed framework was thus found to be useful and robust.
© 1998 British Academy of Management
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