The Role of the Subsidiary in International Business: Functional Responsibilities in the MNE's Value

Chapter 1 presents the scientific problem undertaken in the book and its background. It presents distinct features of the book and the benefits it offers from the perspective of business practice, public policy, and international business researchers. Furthermore, it outlines the contents of the subsequent chapters.

Chapter 2 presents the theoretical background for the topic of functional specialization of subsidiaries. The first two sections of the chapter focus on the internalization theory and the business network theory, respectively. Specifically, they present basic assumptions of the theories, discuss how the internalization theory and the business network theory perceive the role of subsidiaries within the MNE and explain the existence of subsidiary specialization in activity sets within the value creation process of the MNE. The last section of the chapter concentrates on the common phenomenon among modern subsidiaries of competing for functional responsibilities within the MNE. It focuses on reasons for this competition, and presents its various forms and consequences from the perspective of HQs and subsidiaries. Additionally, the section provides real life examples of shifts in the functional responsibilities of foreign subsidiaries.

Chapter 3 presents an extensive critical review of subsidiary role studies (see Table 1). The purpose of the chapter is not to cover all subsidiary role studies, but rather to exhaustively present different approaches towards the functional responsibilities of subsidiaries and how they evolved over time. Hence, different from other reviews of subsidiary role research (see, e.g., Schmid, 2004; Manolopoulos, 2008, Schmid & Daniel, 2007), the chapter focuses entirely on the analyzed studies' perspective toward functional responsibilities of a subsidiary and their different aspects. In the chapter the subsidiary role studies are sorted into three groups: resource-oriented, configuration-oriented, and responsibility-oriented. Within the resource- and configuration-oriented research, functional responsibilities of a subsidiary constitute a background issue to a study's main focus, and thus these groups are analyzed together while taking into account the chronological order of particular studies. At the same time, responsibility-oriented subsidiary role studies are discussed in a separate section, with a particular focus on methodological issues (main purpose of the study, classification dimensions, sample size, etc.) and perspectives applied toward functional responsibilities of a subsidiary. The final section of this chapter focuses on a specific type of responsibility-oriented subsidiary role study that operationalizes the strategic role of a subsidiary (Dzikowska & Andersson, 2018), and then advocates for its use. This study is of particular importance because it gathers all crucial aspects highlighted in the previous research and presents the first operationalization of a subsidiary strategic role, which comprehensively represents functional responsibilities of a subsidiary, allows observations of their shifts, and conduction of a comparison among subsidiaries. The operationalization of the concept is then applied in the empirical part of the book.

Chapter 4 focuses on two aspects of the empirical study: the model of determinants of subsidiaries' functional responsibilities and the study's methodology. The model is developed based on the literature's findings on subsidiary evolution and subsidiary roles. Particularly, it considers aspects such as a subsidiary's competences, initiative, and internal and external embeddedness. Importantly, different from the previous studies focusing on determinants of widely understood subsidiary roles, the developed model focuses on functional responsibilities of a subsidiary. Furthermore, the chapter discusses the data collection process and describes the sample, as well as presents the operationalization of the variables.

Chapter 5 presents the results of the empirical study conducted on a sample of foreign subsidiaries in the manufacturing industry in Poland. The chapter presents the scope of differences in terms of the functional responsibilities fulfilled by subsidiaries and changes in those responsibilities that occurred during 2012-2016. Additionally, it presents the results of the structural equation models that verify the hypotheses developed in Chapter 4 and discusses those results. Finally, the chapter notes the limitations of the study and outlines possible directions for future research on the roles of subsidiaries within the value creation processes of MNEs.