The top executives of foreign subsidiaries have a special role to play in turning their operations into more than mere sales and service outlets. Specifically, subsidiary leaders can promote the development of world-class business capabilities that position their unit of the company to win broader regional responsibilities for achieving corporate goals. For example, a subsidiary’s capability could be its skill in developing and manufacturing a product line. Pratt & Whitney Canada manages a critical line of engines for P&W worldwide. Nokia in the U.K. leads the Finnish telecommunications company’s product development for several key products. Panasonic in Spain handles key aspects of pan-European strategy, and so on.
Lead subsidiaries, especially those operating in the Triad, usually have earned their roles rather than been given them by an authoritarian head office. Our research suggests foreign operations build their stature in the global corporate network by working diligently to establish world-class capabilities, and by communicating those competencies to the head office as well as other lead subsidiaries.
Globalization presented as a single world market for free trade does not exist; Triad-based production and distribution is today’s reality. We believe corporate strategies that are aligned with this reality will be the most successful long into the future.
Karl Moore, [email protected]
Karl Moore is a professor at McGill University’s Faculty of Management and an associate fellow at Templeton College, Oxford University. He is coauthor of Foundations of Corporate Empire: Is History Repeating Itself? (Financial Times Prentice Hall, 2000).
Alan Rugman, [email protected]
Alan Rugman is the L. Leslie Waters Chair of International Business at Indiana University’s Kelley School of Business, and the author of The End of Globalization (AMACOM, 2001).