https://www.mdu.se/

Knowledge creation within multinational enterprises (MNEs) is increasingly driven by subsidiaries, especially those embedded in advanced local clusters. Competence-creating subsidiaries that generate valuable innovations strengthen their strategic importance and survival prospects within the MNE. Yet the processes through which they achieve and sustain a competence-creating role remain underexplored. This study examines foreign-owned subsidiaries in Dublin's financial services cluster to uncover how they develop and enact strategy to become or remain competence creators. Drawing on retrospective and real-time process narratives, we reveal how managers orchestrate a dynamic sequence of choices, decisions, and actions that underpin competence creation and elevate subsidiary influence within the MNE. Our findings advance a more integrative, processual view of subsidiary strategizing by revealing the mechanisms through which competence creation unfolds, specifically, how the interplay of autonomy, initiative, influence, and embeddedness generates and sustains subsidiary capability development. For managers, sustaining such roles requires continually balancing these dimensions to secure long-term strategic relevance and viability.