Omar Salgado Intenational Manufacturing

Abstract:

This paper presents an historical study of 70 years of Multinational Company’s manufacturing network evolution based on business transactions and semi-structured interviews with managers. This history’s milestones and evolutionary stages emerged from the analysis and two evolutionary characteristics were identified: Capability Exploration and Capability Exploitation denoting how the company increased its corporate knowledge and deployed it corporation wide. The output includes a New Taxonomy of Company Transformation aiming to describe how subsidiaries of modern Multinationals influence corporate growth. Keywords: Manufacturing Networks, Multinationals Evolution & Growth, Subsidiaries Capabilities.

Introduction:

(Bartlett C. A., 1988) state that companies’ strategy is shaped by its administrative heritage which become relevant when deciding configuration of assets, distribution of responsibility among business units, company’s norms and managerial style; (Bartlett C. A., 1987) also mentions that competitive forces push companies to optimise efficiency, responsiveness and learning factors which have encouraged debate among practitioners and scholars about tradeoffs between achieving global efficiency and increasing national responsiveness. In consequence, they suggest that companies should move from symmetry in assets configuration towards differentiation of subsidiary capabilities stepping away from centrally oriented organization to the allowance of capability development that would lead to an important network interdependence in which effective network coordination mechanisms need to be applied. However, subsequent research in network coordination explains that the difference in power between foreign business units relies on profit contribution, distance to HQs and especially because of the control of critical linkages (Bartlett S. G., 1990; Birkinshaw, 1995), through which subsidiaries influence the assignation of ‘mandates’ from HQs, issue that would evolve in further subsidiary’s responsibility functional or geographical (Birkinshaw J. , 1996). A subsidiary could thus play different role such as ‘local implementer’ if it adopts HQs technology, ‘specialized contributor’ if it has significant expertise in a specific function, and ‘world mandate’ if it has an extended geographical responsibility (Birkinshaw J. , 1995). The aim of this paper is to describe how subsidiaries of modern MNE’s influence corporate growth. The paper is structured as follows: the VW Group’s evolution is presented in brief, followed by the research method, data analysis, theory of modern MNE’s transformation, and conclusions.

Type: Academic Paper

Author: Salgado, Omar; Shi, Yongjiang (2009)

Repository: Business History Journal