An examination of how parent MNCs gain competitive advantage from foreign-based subsidiaries

Sheahan, Paul (2020) An examination of how parent MNCs gain competitive advantage from foreign-based subsidiaries. Doctoral thesis, Waterford Institute of Technology.

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Abstract

This research examines if, and how, foreign-based subsidiaries of multinational corporations (MNCs) contribute to competitive advantage for the parent MNC. Initially, theoretical underpinnings for this research are derived from the Uppsala Model on the Evolution of the Multi-National Business Enterprise (MBE) (Vahlne and Johanson, 2013), the Ownership, Location and Internalization (OLI) paradigm (Dunning, 2000) and the Relational View of the Firm (Dyer & Singh, 1998). This led to the generation of a conceptual framework which proposes that locational factors (termed regional attributes) contribute to competences for subsidiary MNCs which in turn contribute to a competitive advantage for the parent MNC. While quantitative approaches have previously been applied in this research area, the research methodology chosen to address how competitive advantage accrues to parent MNCs was a qualitative approach using an interpretivist philosophy. The study was based in the Mid-West of Ireland where the author is based and initially a list of regional attributes in this region was assembled based on documentary evidence and an interview with a former IDA executive. Three MNC firms based in this region were then selected, and semi-structured interviews were conducted to assess what competences each subsidiary has, and the extent to which regional attributes contribute to such competences. Finally, interviews were arranged with parent MNC directors of the three firms to assess what competitive advantage accrues to the parent firm from its foreign-based subsidiary and the extent to which subsidiary competences contribute to this competitive advantage. The findings from this research support the view that attributes of the Mid-West of Ireland region do contribute to competences at subsidiary level which, in turn, contribute to parent MNC competitive advantage. In terms of regional attributes, a number of key attributes are proposed for the Mid-West region which include talent availability, infrastructure, the presence of higher education institutes (HEIs), market access and active business networks. These were found to contribute to the many competences generated by subsidiary MNCs which include close partnerships with HEIs, operational cost efficiency and collaborative network opportunities. These competences were, in turn, confirmed by the parent MNC directors to contribute to parent MNC competitive advantage from its foreign subsidiaries; such competitive advantage came from five main areas such as margin enhancement, speed to market and leading innovation. The findings of this study support the view that subsidiary MNCs capitalise on locational advantages that offer opportunity for parent MNC competitive advantage gain. Subsidiary MNCs can derive competences from the region in which they are based and these can contribute to the parent MNC competitive advantage. The research has important implications for policy makers as they seek to promote regions for the purpose of attracting FDI to a region.

Item Type: Thesis (Doctoral)
Uncontrolled Keywords: Multi-national companies, Foreign-based subsidiaries
Departments or Groups: *NONE OF THESE*
Divisions: School of Business > Department of Management and Organization
Depositing User: Derek Langford
Date Deposited: 28 Apr 2021 13:21
Last Modified: 28 Apr 2021 13:21
URI: http://repository.wit.ie/id/eprint/3484

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