When International strategy meets local institutions: Subsidiary influence in the Context of Headquarter Initiatives

Sammanfattning: What do foreign subsidiaries of multinational enterprises (MNEs) do when strategies proposed by headquarters clash with local ways of doing business? Through 105 interviews at AB Volvo, Tomra and DeLaval, this dissertation explores, unpacks, and widens our understanding of the dilemmas and implications of subsidiaries’ dual belonging to corporate and local contexts. Findings on how subsidiaries in the United States, Japan, Germany, and France handled institutional friction caused by innovative and unfamiliar headquarter strategic initiatives are divided into four related but independent papers.Paper 1 takes a close look at why and how local institutions, beyond the well-research role of national-level institutional distance, lead to subsidiary influence within the firm. I identify institutionally derived enablers, rationales, and tactics of subsidiary influence, and shows how subsidiaries leverage similar enablers to either avoid or get involved in initiatives—two contrasting types of influence.Paper 2 focuses on how issue-specific local institutional friction along regulative, cognitive, and normative pillars interact with the decisions, plans and assessment that make up headquarter demands related to initiatives. We propose four distinct subsidiary resolutions, characterized by different enabling and constraining mechanisms, actions and levels of subsidiary influence toward headquarter initiatives and institutions, respectively.Paper 3 further shifts focus to the other outcome of the same phenomenon: subsidiary responses to local institutions, rather than to headquarter strategic initiatives. I detail how subsidiaries, when facing different strategic choices, were constrained by local institutions but at the same time could take measures toward institutional change according to a bottom-up hierarchy.Paper 4 is practitioner-oriented and challenges the notion of local adaptation being the best option when institutional differences stand in the way for global standardization. Synthesizing learnings from the above papers, I propose five additional strategies observed at MNEs facing complex environments.