Neil Hood

Building firm-specific advantages in multinational corporations: the role of subsidiary initiative

A central theme of much of the recent literature on the strategy of the multinational corporation (MNC) is the increasingly important role played by subsidiary companies as contributors to the development of firm-specific advantages. Traditional academic models that viewed subsidiaries as either ‘market access’ providers or as recipients of the parent company’s technology transfers (Vernon, 1966) gave way in the 1980s to richer conceptualizations in which subsidiaries tapped into leading-edge ideas, undertook important research and development work, and became active participants in the formulation and implementation of strategy (Bartlett and Ghoshal, 1986; Hedlund, 1986; Gupta and Govindarajan, 1994). The generation of firm-specific advantages, correspondingly, shifted from being the sole concern of the parent company to a collective responsibility for the corporate network.

An Empirical Study of Development Processes in Foreign-Owned Subsidiaries in Canada and Scotland (1997)

This paper reports on a detailed clinical study of development processes in a sample of foreign-owned manufacturing subsidiaries in Canada and Scotland. Development is used here to refer to the growth and enhancement of subsidiary resources that add increasing levels of value to the multinational corporation (MNC) as a whole. In this context, the development process is viewed as an extension of the internationalisation process, in that it represents increasing levels of resource commitments in foreign markets (Johanson and Vahlne, 1977). The point at which the traditional ‘internationalisation’ process ends, i.e. with the first incidence of FDI, is thus the point at which subsidiary development begins. Despite the widespread evidence for resource-rich and influential subsidiaries (e.g. Forsgren, Holm and Johanson, 1992), the process by which they develop has apparently escaped systematic research attention so far. A few studies have referred to the growth of subsidiary resources but not as their primary objective (e.g. Prahalad and Doz, 1983; Forsgren et al., 1992; Kim and Mauborgne, 1993), and studies of subsidiary types – in which development is implied but never discussed – are legion (e.g. White and Poynter, 1984; Bartlett and Ghoshal, 1986).

Determinants of autonomy in multinational corporation subsidiaries

This paper reports on a survey of German and Japanese manufacturing affiliates located in the British Isles. One focus of interest is the degree of autonomy possessed by the subsidiary, and linkages between this and a range of strategic variables is explored. A second element of the investigation examines how the level of autonomy may be predicted from a smaller number of significant strategic variables. The paper concludes with a discussion of the implications of high autonomy at subsidiary level and some reflections on ramifications for multinational corporation (MNC) parents and policy makers. High-autonomy subsidiaries are identified as critical for the economic development objectives of policy makers.

Global Strategies, Multinational Subsidiary Roles and Economic Impact in Scotland

YOUNG S., HOOD N. and DUNLOP S. (1988) Global strategies, multinational subsidiary roles and economic impact in Scotland, Reg. Studies 22, 487–497. This paper considers in a preliminary way the influence of MNE global strategies on foreign subsidiary roles in Scotland, and from this some of the economic effects on the Scottish economy are highlighted. The study is based on a postal survey of MNE subsidiaries in Scotland, the responses being analysed using the statistical techniques of cluster analysis and discriminant analysis. Despite the weaknesses of the former technique in particular, the preliminary findings suggest substantial benefits to the economy from the one third of affiliates in the “strategic independent” / “product specialist” categories, as compared with the conventional branch plants (“rationalized manufacturers”) and “miniature replica” subsidiaries. YOUNG S., HOOD N. et DUNLOP S. (1988) Strategies globales, role des filiales des societes multi-nationales et impact economique en Ecosse, ...

The Globalization of Multinational Enterprise Activity and Economic Development

Preface PART 1: ISSUES AND THEORY Globalization, Multinational Enterprises and Economic Development Globalization and the Theory Of MNE Activity PART 2: THE CORPORATE PERSPECTIVE Multinational Corporate Strategy and Organisation An Internal Market Perspective Globalization, Corporate Strategies and Business Services Globalization and the Growth of Small and Non-Dominant Firms: Case Evidence from Scotland PART 3: THE COUNTRY PERSPECTIVE Development After Industrialisation: Poor Countries in an Electronically Integrated Global Economy Egypt At A Crossroads: MNEs and Economic Development in a Global Environment MNEs, Globalization and Economic Development: The Case Of Argentina in the 1990s The Globalization of Business and East Asian Developing Country Multinationals Small And Medium-Sized MNCs, Industrial Clusters and Globalization: The Japanese Experience PART 4: THE POLICY PERSPECTIVE The World Trade Organization: Global Rule Maker? Locational Tournaments for FDI: Inward Investment into Europe in a Global World The Globalization of Competition and the Localisation of Competitive Advantage: Policies Toward Regional Clustering Plant Subsidiary Upgrading: Some Evidence from the Electronics Industry Regions, Governance and FDI: The Case of Wales PART 5 : CONCLUSIONS Globalization and Economic Development: Overview and Conclusions

Strategic evolution within Japanese manufacturing plants in Europe: UK evidence

The paper explores the strategic intentions of Japanese companies in establishing manufacturing subsidiaries in Europe; examines the types of strategies which have been pursued within these subsidiaries and reviews their performance against established criteria. Within the context of related academic literature in this field, the paper reports on a survey of Japanese manufacturing plants operating within the UK, located in Scotland. The mission, strategy and operating characteristics of the sample plants are evaluated, as is the relationship between the strategic intentions of the parent and the criteria for performance evaluation at plant level. The findings in this area, and as regards competitive priorities for these types of plant, are found to be consistent with evidence elsewhere. Finally, the paper considers some policy implications for both Japanese companies and inward investment attraction agencies.

R & D intensity in the affiliates of US owned electronics companies manufacturing in Scotland

Haug P., Hood N. and Young S. (1983) R & D intensity in the affiliates of US owned electronics companies manufacturing in Scotland, Reg. Studies 17, 383–392. The paper examines the characteristics of R & D activity within a sample of affiliates of US owned electronics companies in Scotland against the setting of other empirical work. A variety of measures of R & D intensity are employed in analysing the sample and attention is drawn to a range of influences which underly the process of technical unit establishment and development. The findings indicate a variety of benefits to the Scottish economy associated with R & D, including high-level employment. R & D units provide a mechanism for facilitating technology transfers, and commercialization of research results was high and based at affiliate level.

Public venture capital and economic development: The Scottish experience

This paper attempts to both chronicle and evaluate the development of public venture capital in Scotland over the past 20 years or so. This terminology refers to the role which public bodies have sought to play in venture capital to achieve economic development ends, initially using public money, but in recent years by launching and managing funds involving both private and public capital. The paper concentrates on the activities of Scottish Development Finance (SDF), the investment arm of the major Government funded economic development agency in Scotland called Scottish Enterprise (SE) and its predecessor body, the Scottish Development Agency (SDA). SDF has been by far the most substantial public venture capital investor in Scotland throughout this period and a study of its evolution and development is an illuminating one for any student of industrial policy. This study is longitudinal, charting the various different policy environments and political climates in which SDF has existed, as well as seeking to evaluate its achievements, and in particular its impact on economic development.

Subsidiary Development in German and Japanese Manufacturing Subsidiaries in the British Isles

HOOD N. and TAGGART J. H. (1999) Subsidiary development in German and Japanese manufacturing subsidiaries in the British Isles, Reg. Studies 33 , 513-528. Within the context of the role which inward investment plays in economic growth, this paper compares subsidiary development patterns in German and Japanese manufacturing subsidiaries in the British Isles. It is based on a sample of 177 companies which were surveyed in 1994/95, 35 of which were followed up by interviews over the same period. Based on the literature on subsidiary development, and especially on the role of strategic choice open to local management, a series of hypotheses are tested on subsidiary roles and decision-making status. Finally, and based on the comparative evidence, economic development policy issues are examined from three different perspectives, namely development agencies, multinational companies and subsidiary managers. HOOD N. et TAGGART J. H. (1999) Le developpement subsidiaire dans les filiales industrielles allemandes et ...

Implementing the Cluster Approach: Some Lessons from the Scottish Experience

Abstract The focus of this article is on the challenges faced by policymakers in implementing the Porterian cluster approach in an economic development context. Among the issues which are addressed conceptually and in some detail are those of cluster selection, characterization, and assessment. The article is firmly rooted in the experience gleaned from applying a cluster approach in Scotland. Its central empirical thrust lies in exploring the relevance of cluster methodology in two distinctly different industrial sectors, namely semiconductors and software in the Scottish context. Among its conclusions are that suboptimal future policy outcomes are likely to occur if they are based on cluster methodology applied without analytical rigor. Specific advice is given as to how this can be avoided.