Subsidiaries within a High-Tech MNC. A reappraisal of the Role of Functions

Abstract

The recent management literature on multinational corporations (MNCs) has mainly focused on the new role played by subsidiaries within the international firms. Many scholars have underlined that MNCs tend to organise themselves along a differentiated network approach, where subsidiaries play a very different role according to their internal resources and the significance of the local environment. This strategic and organisational model dates back to the pioneering work of Bartlett and Goshal, who called this new international strategy “Transnational” so as to differentiate it from the classical Multidomestic and Global strategies. Along with the different roles played by the subsidiaries, this model is characterised by the simultaneous existence of cooperation and competition within the multinational corporations. The present work focuses on the role of the Italian subsidiary of AgilentTechnologies, a multinational firm with around 36,000 employees that is active in more than 40 countries in high-tech sectors such as electronics, telecommunications and life science. The case study brought new light to the usual distinction that is commonly made with regard to the role of a subsidiary. When we try to apply the Transnational model to Agilent we realise that neither this model nor the traditional typologies (Multidomestic, Global) apply to the case we have studied. The role of the subsidiary changes significantly according to the function being considered. Therefore, we conclude that the role of function should be re-evaluated when the strategy and the structure of an MNC is defined. Not only does the classification of subsidiaries change according to the function in question, but the strategic posture and the organisational structure of MNCs should also be re-evaluated in light of the function under consideration. Our study shows how activities such as R&D, where coopetition represents a strategic source of advantage, seem to follow the Transnational scheme, while others such as sales are mainly globally managed