The effect on subsidiary strategy of the recession : A case study of 7 subsidiaries belonging to 3 multinational corporations

Sammanfattning: Study Purpose Given the current financial stagnation in America and Europe and the increasing priority given to growth markets, the aim of our thesis is to study the impact on business strategy for subsidiaries in multinational corporations. The following research question is studied: How do MNC subsidiaries adjust their internal strategy as a result of this recession? Method The study design is a multiple case study. The paper explores three companies, with a focus on their subsidiaries. The study makes use of a case study design due to a lack of prior research (and theorizing) on the subject. Main Findings The study finds that all of the six internal market variables considered (i.e. issue selling, autonomy, initiative, integration, attention seeking, and internal competition) were affected by the recession and in most cases there was an attempt by subsidiary managers to strategically change them as a result. The level of all of the variables with the exception of initiative and autonomy increased in our case companies. All of the six variables were utilized by subsidiaries managers as recession combating strategies, with managers attempting to increase the usage of each of the six. The study further finds that both the classification of subsidiary market and the current classification according to the six internal variables are both related to the subsidiary strategic response to the recession. Implications This study is of particular importance to multinational subsidiary managers, as it examines a lesser studied and under-considered strategic avenue (i.e. the internal strategic choices) with which to respond to the global recession. The study should be of particular interest to business scholars who have under their areas of investigation ‘international businesses’, ‘subsidiary strategy’ or the ‘link between business strategy and the recession’. Subsidiary managers should be aware that other subsidiaries are taking action regarding their internal environment (i.e. internal strategy and role in the MNC) during the recession/stagnation. Our study has shown that this can be of tremendous benefit, both in terms of business performance and increasing subsidiary importance and influence within the MNC. Originality/value This study assesses actions taken by subsidiary managers in response to the current recession, which is significantly different from previous recessions. The study considers these actions with a focus on the strategic decisions uniquely available to subsidiary managers of MNC’s with specific regard to their internal environment. The paper further puts forward a sophisticated model to describe subsidiaries based on the internal strategic options available to them.