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The phenomenon of subsidiary initiative has received increasing attention in recent years, but the consequences of initiatives and the associated dynamics of headquarters subsidiary relationships have received much less research attention. Building on resource dependence theory and self-determination theory we argue that two basic goals subsidiary managers pursue are to achieve autonomy vis-a-vis corporate headquarters, and influence over other units. We investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters' response through granting attention or monitoring affects the realization of the subsidiary's goals. Using structural equation modeling, our hypotheses are tested by drawing on a sample of 257 subsidiaries located in three different countries (Australia, Canada and the United Kingdom). Our results show that subsidiaries are not able to increase their influence through initiatives unless they get headquarters' attention. We also find that subsidiary initiatives have a direct effect on subsidiary autonomy, but the caveat is that initiatives also evoke headquarters monitoring, which in turn decreases the subsidiary's autonomy. In addition to providing insights into how subsidiaries can achieve their goals, the paper also sheds light on the critical role headquarters plays in leveraging initiatives, and the influence of individual subsidiaries in the multinational enterprise. 

This chapter contends that the international business (IB) and strategic management (SM) fields have many commonalities that should be considered in a turbulent globalized business context. IB studies refer to the need for local integration and local adaptation whereas empirics in SM pinpoint the complementary effects of central planning and decentralized decisionmaking. We present and synthesize these rather field specific perspectives and try to synthesize insights from both fields in an adaptive strategy-making model including the effects of autonomous subsidiary initiatives and intended mandates from corporate headquarters. The model considers local subsidiary actions of both operational and strategic nature and we argue that it may be futile to distinguish between these effects as incremental operational responses can cumulate into more substantial changes over time with dimensions of strategic adaptation. The model provides a foundation for further considerations about how to combine central intent and direction with decentralization and autonomous initiatives in the multinational corporation.

The MNE’s proficiency sourcing knowledge across borders is its raison-d’être. The broad knowledge sourcing overcomes the liability of foreignness and facilitates competitive advantage. Understanding the processes of subsidiary learning in local environments and alliance partners and then sharing within the Multinational Enterprise (MNE) is of immense importance to MNE management. This commentary summarizes and critically reflects on two chapters dealing with these issues, Chapter 7 and Chapter 8. The chapters nicely complement each other, one taking a subsidiary perspective and the other a headquarters perspective. Together they span ways of learning through captive, alliance, and market modes from foreign locations. Although there are exciting areas that are not investigated here the two chapters surface many matters for further research and pave the way for a range of urgent projects. MNE innovation performance through foreign knowledge sourcing and cross-border sharing continues to be a vibrant research area and subsidiaries’ roles in innovation processes remain at the centre of contemporary research.

We argue that a foreign-based R&D subsidiary of a multinational enterprise (MNE) can potentially source knowledge from three diverse knowledge networks, namely (i) external knowledge network of the homecountry, (ii) external knowledge network of the host country, and (iii) internal (MNE) knowledge network. Drawing on the relative costs andbenefits associated with the process of synergistic knowledge, this studyexamines whether a substitutive or a complementary relationship exists when two of the aforementioned networks collaborate in order to generate new knowledge at the subsidiary level.

Our study’s sample is based on asurvey questionnaire addressed to foreign-based R&D subsidiaries of Fortune 500 companies. We assess the existence of complementarity/substitutability using the “production function approach.” Our results indicate that a complementary relationship exists between external knowledge network of the host and the home country, as well as between external knowledge network of the host country and internal knowledge network. On the other hand, external knowledge network of the home country and internal knowledge network form a substitutive relationship. Our study offers a more comprehensive view of the diverse sources/knowledge networks that R&D subsidiaries are sourcing knowledge from when compared to existing research. We also specify and account for the costs/benefits involved in knowledge sourcing and thereby detect possible substitution/complementarity between different sources ofknowledge. So far, there has been limited to nonexistent research into the diversity of knowledge networks of R&D subsidiaries and the examination of potential substitutabilities and complementarities. Hence our empirical study contributes to the development of this particular research stream.

This paper focuses on HQ intervention and the costs associated with it. Extant literature specifies HQ interventions inareas such as organizing lateral knowledge transfers, strategic planning,support functions, transfer of knowledge to subsidiaries, control mechanisms as means to reduce incentive problems. We link MNC organization with the magnitude of HQ intervention in subunits’ affairs, and examine types of costs such meddling gives rise to. This gives us the possibility ofteasing out how increased costs of specific intrusions will affect the netvalue of HQ action. HQ intervention effects the motivation of subunits and influences the different types of costs. We argue that the scope and type of intervention as well as subsidiary characteristics affect the severity of cost increases, ultimately influencing MNC performance.

Although the core concepts underlying IB and IHRM provide a common lexicon and epistemology, this commonality is often more implicit than explicit. We highlight not only the common ground but also the lack of critical dialogue between the two fields. This paper asks: What can each field learn from the other? What do scholars from IB learn from IHRM and vice versa? We identify a possible agenda and concerns regarding theory building as a basis for dialogue between the two fields. © 2019

This article examines the utilization of knowledge transferred between sending and receiving subsidiaries within multinational enterprises. A model was developed and tested on 169 specific knowledge transfer projects. The model explains the utilization of knowledge subject to transfer in terms of hierarchical governance tool efficacy and lateral relationships within the multinational enterprise. The results show that headquarters' involvement during knowledge development does not have any significant impact on subsequent knowledge utilization in the receiving units and, in fact, hierarchical governance forms have a negative impact on knowledge utilization. However, lateral relationships are positive stimuli to building subsidiary capabilities in the knowledge transfer process that enhance receiving unit knowledge utilization. 

Many manuscripts submitted to the Journal of International Business Studies propose an interaction effect in their models in an effort to explain the complexity and contingency of relationships across borders. In this article, we provide guidance on how best to explain the interaction effects theoretically within and across levels of analysis. First, in the case of interactions within the same level of analysis, we suggest that authors provide an explanation of the mechanisms that link the main independent variable to the dependent variable, and then explain how the interaction variable modifies these mechanisms. Moreover, to ensure that the arguments are theoretically complete, we suggest that authors theoretically rule out the potential reverse interaction effect between the main variable and moderating variable. Second, in the case of interactions across levels of analysis, we suggest that authors identify the cross-level nature of the moderating relationships, specify the level of analysis of the main relationship and the nested nature of the cross-level influences, and theoretically explain these cross-level influences. Additionally, we suggest that authors pay particular attention to nesting in order to theoretically rule out reverse interactions.

Theoverall aim is to address the role of internal embeddedness in subsidiary’sinfluence on strategic decisions in the multinational enterprise andspecifically discuss how the internal production network and the subsidiary management’sinterpersonal relationships facilitate and impede its potential influence.  The two dimensions of internal embeddednessare scrutinized individually and then put together in a conceptualframework.  The internal productionnetwork is made up of where and what the subsidiary do, i.e. their activitiesand how these activities are related to the sister subsidiaries’ activities (astructural dimension), and the interpersonal network is based upon thesubsidiary management’s “voice” and standing in the larger MNC. The papers tentativeconclusion – presented as a conceptual model – is that the internal productionnetwork is the baseline for the degree of strategic influence a subsidiary haswhilst the subsidiary management’s interpersonal network can extend thisinfluence.

The relevance of ideas is at the core of the IB field and has been captured in concepts like technology, innovation and knowledge. While these concepts have evolved over the last decades, the point that the ideas and the international connectivity are central for IB remains genuine. This paper is an attempt to take stock of the evolution of the concepts technology, innovation and knowledge in IB literature along the past five decades with a particular focus on the role of the Columbia Journal of World Business (CJWB) and the Journal of World Business (JWB) in this evolution. Likewise, our objective is to offer a research agenda for the coming decade. We proceed in two steps. First, we scrutinize how the IB literature has progressed and expanded over the last five decades, illustrating this on the basis of articles published in CJWB and JWB. Second, we take a helicopter view on this literature and reflect on the insights we have gained and the challenges the IB field has ahead that can constitute the basis for a future research agenda. We highlight the importance of creating a micro-foundation of knowledge processes where mechanisms on the interaction between the higher levels (nation, firm, teams) and the individual level are clarified.

This paper examines the competence development of subsidiaries in multinational enterprises. We analyze how local subsidiary environments affect the development of technological and business competencies among other units in the multinational enterprise. We test our predictions using data from 2,107 foreign-owned subsidiaries located in seven European countries, by means of structural equation modeling - namely, LISREL. By bringing the local environment to the fore, we contribute to the literature on the emergence and determinants of firm-specific advantages. We link local subsidiary environments to the development of the competencies of other units in the multinational enterprise. The role of the multinational enterprise is characterized as integrative, as it may bridge local competencies and environments that are conducive to competence creation, and as it facilitates the use of resources residing locally throughout the organization. Thus, we contribute to an enhanced understanding of location as a determinant of the creation of units of competence and centers of excellence within multinational enterprises. In other words, we demonstrate that country-specific advantages are beneficial for competence creation in units other than the local subsidiary. We thereby link country-specific advantages to the creation of firm-specific advantages in the multinational enterprise - i.e., the multinational enterprise can build and augment firm-specific advantages by making the most of country-specific advantages.

Anchored in a subsidiary evolutionary framework,this paper analyzes how headquarters of multinational corporations canorchestrate its network of subsidiaries. Headquarters orchestration is a valueadding activity aimed at increasing the performance of the organization. Grantingsubsidiaries autonomy and giving them attention is found to positivelyinfluence the scope of subsidiary activities as well as the level of subsidiarycompetencies. This corresponds to how headquarters, as a hub-type of firm, canadd value by orchestrating for subsidiary evolution. Furthermore, our resultsindicate that if subsidiaries evolve it has positive effects on the overall performanceof the multinational corporation. Thus, our findings help to explain howheadquarters may create value within the multinational corporation in terms ofincreasing subsidiaries’ contribution to performance. The results, based on asample of 2107 subsidiaries, elucidate the entrepreneurial role and function ofheadquarters as an important orchestrator of the multinational corporation forsubsidiary evolution and value creation. Theoretically, this extends theunderstanding of drivers and effects of subsidiary evolution and assigns animportant role and function to headquarters in the orchestration of networkedmultinational corporations.

Value-chain networks are of major importance to multinational subsidiaries, yet they have failed to receive significant attention in the literature. We extend the knowledge-based view of the firm by exploring whether three different types of multinational subsidiary networks have dissimilar impact on their initiatives. The level and degree of subsidiary entrepreneurial activities enhances subsidiary performance and generate positive externalities in both the wider multinational corporation (MNC) system and the host country (Birkinshaw, 2000; Dimitratos et al., 2009). Despite the increased interest in the determinants of subsidiary initiative and knowledge integration, the existing literature has primarily focused on the characteristics of the knowledge, e.g. tacitness, stickiness, causal ambiguity, and attributes of the sender and receiver, such as, motivation and absorptive capacity; while the location, or sources, of the knowledge remain largely un-researched with a few exceptions (see e.g. Forsgren, 1999; Foss and Pedersen, 2002). Likewise, network theorists have emphasized different forms of networks as productive for entrepreneurial initiatives (Coleman, 1998; Burt, 2000); and described structural characteristics impeding entrepreneurial activity leading to organizational myopia (Uzzi, 1997; Hansen 1999). Very few, if any, attempts have been pursued to explain how the different types of networks a subsidiary is simultaneously involved affect its entrepreneurial initiatives. We develop four hypotheses based on MNC network and initiative literature streams.

750 UK based subsidiaries originating from the US, EU and Japan were randomly selected, adding up to a total sample of 2,250 subsidiaries. After excluding subsidiaries that were not eligible to participate in the survey, the actual sample of subsidiaries ended up being 1,770 subsidiaries. A structured questionnaire was pretested by academics and subsidiary managers in order to check its comprehensibility and clarity before the launch of the survey. The data collection from the 1,770 subsidiaries included three postal waves and two rounds of follow-up phone calls in between. The total number of usable responses that we employed to test our hypotheses was 268 subsidiaries. A structured questionnaire was posted to each subsidiary’s managing director; while a second top management respondent also participated in the survey

in 10% of the sample to establish inter-rater reliability. The overall response rate across the entire sample of subsidiaries was 16%. The Likert scales draw from previously developed measures. We also took measures to control for common method variance following the suggestions of Podsakoff et al. (2003).

Based on this sample of 268 subsidiaries and a moderated regression analysis, we find that value-chain networks have a higher positive impact than multinational corporation networks and non value-chain networks; because they may provide the subsidiary knowledge with market opportunities that it lacks and that the other types of networks cannot effectively provide. However, value-chain networks have a negative effect on initiative of a subsidiary operating in an environment of high uncertainty; because they can constrain the exploration and creation of new knowledge that cannot be provided by any of the networks. Contrary to our expectations, the combined effect of value-chain and non-value chain networks has a negative influence on enhancing initiatives; and, the combined effect of value-chain and MNC networks does not affect entrepreneurial initiatives.

This paper has considerable research implications. As regards the knowledge based view, the paper argues that not all firm-external knowledge is equally valuable in developing entrepreneurial initiatives. The value of this knowledge may depend on whether the subsidiary needs that knowledge. Since an MNC subsidiary tends to lack knowledge about its local and foreign country market opportunities and such knowledge is difficult for it to acquire because it is tacit, establishing networks with value-chain partners that have this knowledge generates entrepreneurial initiatives. This is especially the case when subsidiaries operate in an environment of high certainty. Furthermore, knowledge accessed through both value-chain and other types of networks may not bring synergistic effects as it is likely to be complex and time consuming to manage.

The paper also contributes to the theme of subsidiary entrepreneurship. This is the first study to more fully examine the role of subsidiary value-chain networks in enhancing entrepreneurial initiatives. Prior studies focus primarily on MNC networks and host-country networks. Additionally, this is seemingly the first study that compared the relative effects of all three types of networks on subsidiary entrepreneurial initiatives. It shows that, after considering the effects of other types of networks, value-chain networks appear to have the largest positive influence, especially when the subsidiaries operate in an environment of high certainty.

The paper also contributes to managerial practice. Subsidiary managers who wish to develop initiatives are advised to establish value-chain networks with customers, suppliers and distributors. This is especially the case for subsidiaries operating in a stable environment. In addition, managers are advised to pursue networking activities with solely value-added partners since the simultaneous implementation of all types of value added activities is seemingly detrimental for entrepreneurial initiatives.

The theoretical research stream that depicts multinational companies (MNCs) as networked organizations has offered new insights on contemporary enterprises’ way of functioning. However, the majority of the research has focused on external embeddedness, that is, MNC subsidiaries’ local business relationships, and its impact on subsidiary organizational performance. This conceptual chapter addresses the lack of research focusing on internal embeddedness, that is, subsidiary relationships with headquarters and sister subsidiaries. Internal embeddedness is discussed from two dimensions: the internal production network and the MNC manager’s social network. The characteristics of each dimension and how they relate to earlier research, leads to a number of theoretical propositions. The chapter concludes with a discussion on how external and internal embeddedness relate, as well as how they may impact the subsidiary’s (organizational) performance.

In the beginning of the twenty-first century, Andersson, Forsgren, and Holm (2001, 2002) published two highly cited articles on the relationship between network embeddedness and the evolution of multinational enterprise (MNE) subsidiary roles. These articles paved the way for research examining the importance of market knowledge acquired by an MNE subsidiary through being embedded in local networks, which would, in time, be expected to positively influence the competence development of other MNE units. The present chapter presents an overview of the key contributions of these seminal papers, followed by a discussion about the theoretical and empirical advancements concerning the relationship between embeddedness and subsidiary competence development. We provide suggestions around how to conceptualize competence development and knowledge transfer in relation to subsidiary external embeddedness and highlight areas where more research is needed.

We examine the success of knowledge transfer within an MNE network by unpacking aggregate knowledge flows into individual projects. We assess knowledge transfer performance along two dimensions: utilization of transferred knowledge and transfer cost. We argue that the substitutive versus complementary nature of subunits' activities is a key determinant of knowledge utilization at the target subunit. Further, we posit that headquarters' incentives and monitoring are crucial factors affecting both the utilization and transfer cost dimensions. Our empirical results, based on 141 individual intersubunit knowledge transfer projects involving 49 subunits in 12 European countries largely support our arguments. Our methodology highlights the fact that aggregate measures of interunit knowledge flows can be misleading since they may include individual projects with widely differing levels of success. Copyright (C) 2015 Strategic Management Society.

MNE subsidiariesface a trade-off between the ambition to source knowledge that is embedded in the host-location and the need to protect their corporation’s knowledge-based assets from external appropriationby close competitors. In this paper, we explore how foreign subsidiaries operating in a highly competitive knowledge-based cluster or chestrate their local linkages with non-value chain partners to strategically manage the knowledge imperatives to which they are exposed.

Our results show that subsidiaries establish heterogeneous patterns of interaction with different non-value chain agents in the host location, as their perception regarding the role these agents may play varies. More specifically, in the presence of fierce competition, when higher spillover risks should compel them to refrain from local interaction, subsidiaries do shy away from competitors. However, some simultaneously pursue their knowledge creation objectives by linking to agents that minimize spillover risks while still offering learning opportunities, such as the local university. This leads us to conclude that spillover risks, by themselves, do not automatically drive the choice to avoid interaction, as subsidiaries are able to strategically differentiate between various types of partners. In so doing we reconcile the extant contradiction between the strategic deterrence and physical attraction theses

MNE subsidiaries face a trade-off between the ambition to source knowledge embedded in the host-location and the need to protect their corporation’s knowledge from appropriation by competitors. We explore how foreign subsidiaries operating in a highly competitive clusters orchestrate their local linkages with non-value chain partners to manage the knowledge imperatives they are exposed to.

Our results show that subsidiaries establish heterogeneous patterns of interaction with different local non-value chain agents. We reconcile the extant contradiction between the strategic deterrence and physical attraction theses in that spillover risks, by themselves, do not automatically drive the choice to avoid interaction.

This paper has two closely related purposes. A first purpose is to increase ouunderstanding of foreign acquisitions by considering them within the conteof the internationalization process of the firm. Second, by focusing on the rof acquisitions the paper is meant to contribute to a development of the moof the internationalization process of the firm. By focusing the embedded nture of the business firm it places attention on the role of organic acquisitias contrasted to the discontinuous changes associated with foreign acquisitions.

A conceptual result is that the paper offers a framework for analyzing the rof foreign acquisitions in the internationalization process of the business firThis framework takes into consideration both antecedents to and consequencof acquisitions.

An empirical result is the finding that there seems to be a strong tendency amonacquired firms to remain unaffected by the revised legal boundaries long afthe acquisition. Thus, the result of acquisitions seems primarily to be strengtening old rather than establishing new market network positions.

Later years' globalization and increased competition has forced firms to re-evaluate their current configuration and location of activities An emerging shortage of talent and a recognition of knowledge sources far more spread around the globe have Induced firms to re-think their configuration of knowledge-intensive activities, such as R&D Disaggregation and dispersion of activities is though a double edged sword as it simultaneously enhances the access to resources and talent increasing the value of knowledge development activities in the firm, but also add to the costs of management and coordination In this article we discuss how designing the configuration of R&D activities and the utilization of organizational coordination and control mechanisms help firms to stay on top of the costs induced by inter-task interdependencies among the disaggregated R&D activities and thereby leveraging the knowledge and capabilities developed in the offshored activities We utilize the Danish wind mill company Vestas as an empirical example to illustrate our discussion.

In this paper the authors explore the role of a subsidiary as a centre of excellencewithin the multinational corporation (MNC). It is argued that such a role can bebased on the characteristics of a subsidiary's internal resources, its relationshipswith the rest of the MNC and the business context of which the subsidiary is apart. Based on the perspective of an MNC as a Network the latter aspect is es-pecially focused. Through an analysis of 98 subsidiaries the importance of thesubsidiary's embeddedness, in terms of business relationships with specific cus-tomers and suppliers for its role as a centre of excellence, is investigated.

A conceptual result from this paper is that it offers a framework for analysingthe role of the business context for the subsidiary's role as a centre of excel-lence. Productive relationships with external counterparts in the business envi-ronment can be used by the subsidiary to enhance its role as a centre of excel-lence. An empirical result is that the external embeddedness of the subsidiaryis an important and significant explanatory variable of the subsidiary's possibil-ities to be considered important to the MNC as well as a prerequisite to influ-ence the future behaviour of MNC.

Subsidiary networks are defined as webs of specific inter-firm and intra-firm relationships that a foreign subsidiary of an MNC has to host-country actors and units within the MNC, respectively. Network theory offers a pertinent view on critical resources and has shown that the most important resource is the web of specific relationships in which a unit (subsidiary) is embedded. Economic actions and the product of such actions are influenced by the unit’s dyadic relationships and all connected relationships, as are all social activities, which is why utilizing an embeddedness approach helps avoid the atomization of an actor when studying its behavior. Embeddedness is defined as a subsidiary’s interdependence with its network partners and is often specified by distinguishing a subsidiary’s external embeddedness in the host-country environment and its internal embeddedness within the global MNE environment.

Subsidiaries ofmultinational enterprises operate in an often conflicting dual context. Theyare at the same time a part of the external local host country environment andthe internal (MNE) global network. There is as yet limited integratedexplanation of the simultaneous co-evolution of internal subsidiary R&D andknowledge density and breadth in this dual network in particular, theconditions under which subsidiaries tap into local knowledge sources and whichnetwork partners are most useful and the attendant relations and role evolution(or diminution) within the MNE. This paper reports on a qualitative study offour MNE subsidiaries that are both internal MNE ‘centre of excellence’ andlong-serving and leading members of a mature high-tech cluster. In a series ofsemi-structured interviews with key knowledge holders the evolution ofsubsidiary R&D roles were teased out and the importance and quality ofrelations in the dual context are identified.

This paper conceptualizes the knowledge transfer implications of social (lateral) integration mechanisms in the MNE. The generation and transfer of knowledge among geographically dispersed units is one of the primary concerns for the multinational enterprise (MNE) (Ghoshal & Bartlett, 1990; Nohria & Ghoshal, 1997). One of the most used tools for MNE headquarters to stimulate knowledge transfer between subsidiaries, is social or lateral integration mechanisms (for example, committees, meetings, liaisons, expats) (Baliga & Jaeger, 1984). Social mechanisms are perceived as costlier than alternative coordination mechanisms (i.e. formal or centralized coordination mechanisms), but a range of studies have found that these mechanisms open up for communication, dialogue and trust which in turn facilitate knowledge sharing and capability development (i.e. Gupta and Govindarajan, 1991). In a study of an MNE with activities in more than 24 countries, we have data from 115 foreign units that inform on the extent to which the unit is socially integrated with the rest of the MNE, the extent of knowledge transfer between units as well as costs of bargaining between the unit and headquarters. Our findings suggest that social integration on the level of the individual employee increases knowledge transfer between units, but social integration viewed from the management level in the units has the opposite effect. In addition, social integration increases bargaining costs. These findings suggest that there is a darker side of social integration in MNE’s that warrant scholarly attention.

Purpose: This study aims to investigate the drivers of political embeddedness and the possible outcome in terms of autonomy and subsidiary unique competences.

Design/methodology/approach: This study draws on resource dependence theory and applies structural equation modeling on a sample of 193 subsidiaries.

Findings: Political embeddedness is confirmed as a source of potential autonomy and the development of competences and is usually boosted by previous existing networks at the internal and external levels.

Originality/value: The authors investigate and discuss how multinational corporations can leverage political resources in host-country political arenas, extending their understanding of the interplay between political activities and market strategies.

This chapter describes how incorporating real-time simulation in different value chain processes can affect business models and benefit various stakeholders. The primary objective is to explain how real-time simulation tools can increasingly represent real-world functionality in today’s businesses and emerging industries. Different value-chain activities are discussed, and examples are given of value creation based on real-time simulation, starting from product development and continuing through customer receipt.

This paper contributes to the emerging literature on the subsidiary in its dual context (Achcaoucaou et al, 2014; Ciabuschi et al, 2014, Figuereido, 2012; Meyer et al., 2011; Mudambi and Swift, 2012). However, this paper departs from the above studies, which all take a rather static view of the dually embedded subsidiary. A dynamic co-evolutionary perspective is taken, by longitudinally tracking the guided coevolution of subsidiary role and local network’s knowledge stock. We subscribe more to the complementarity for balanced coevolution in both contexts (Ciabuschi et al., 2014) over the trade-off thesis in that reliance on one context for resources may limit access to resources in the other context (Gammelgaard and Pedersen, 2010).

We show how the subsidiary is both a catalyst and coordinator of resource and knowledge flow in a form of guided coevolution to ensure requisite variety and hence accentuate the importance of dual embeddedness in understanding subsidiary evolution.

The complex nature of international business research, with its cross-country and multilevel nature, complicates the empirical identification of relationships among theoretical constructs. The objective of this editorial is to provide guidance to help international business scholars navigate this complexity and ensure that readers can trust their findings. We provide suggestions for how to rule out alternative explanations, explaining key considerations not only in empirical analyses, but also in theory building and in research design. Our discussion covers both qualitative and quantitative studies, because we believe that it is imperative to understand how trustworthiness is established in both traditions, even for international business researchers who self-identify with only one. This enables scholars to have a broader scope of knowledge when interpreting past research in the field and to be more adept at explaining their design choices to a diverse audience.

This paper investigates conceptually how new Greenfield subsidiaries develop relationships over time. We focus our analysis on the earliest start-up stage of new Greenfield subsidiaries, and on the dynamics of relationships development with five different groups of actors within the MNC and the local environment of the new Greenfield. We argue that relationship strength, or the intensity of interaction and resource exchange, depends on the new Greenfield's degree of dependence or interdependence within these relationships and develop propositions based on institutional theory, resource dependency theory and network approaches. In the concluding sections we suggest directions for future work to enhance understanding of the dynamics of relationship management in new Greenfield expansions.

Research Summary: We provide a more granular and comprehensive approach to subsidiary evolution and enhance the understanding of the complexity of the subsidiary's evolution in the era of value chain fine-slicing. We extend Birkinshaw and Hood's model of general processes of subsidiary evolution into a model of functional evolutionary paths that represents nine configurations of charter and capability changes. We examine initiative, autonomy, and track record as determinants of 1455 functional evolutionary paths identified in 266 subsidiaries operating in the Polish and Swiss manufacturing sectors. Through a two-level multinomial logistic regression model, we learn that subsidiary initiative and track record are positively related to an increase in subsidiaries' charter and capability enhancement, respectively. Subsidiary autonomy though, is negatively related to charter increase and capability enhancement. Managerial Summary: We consider subsidiaries' initiative, autonomy, and track record as factors shaping the changes in functional responsibilities and corresponding capabilities. Our results show that frequent and successful initiatives support a functional charter increase but do not necessarily enhance corresponding functional capabilities. Furthermore, a lower level of decision-making autonomy in efficiency-driven organizations does not translate into difficulties with a functional charter increase. A subsidiary can benefit from lower autonomy by focusing subsidiary-development efforts on areas aligned with the headquarters' interests. A proven track record does not translate into a functional charter increase; in some cases, it even increases the likelihood of charter depletion. Nonetheless, it increases the likelihood of enhancing functional capability.