The nascence of a springboard subsidiary: drivers of the evolution of a subsidiary role

Abstract

Purpose: The aim of this study is to explore the drivers of the evolution of a subsidiary’s strategic role from an ordinary subsidiary into a springboard subsidiary in multinational corporations, paying special attention to the role of subsidiary management in this transformation. Design/methodology/approach: The authors apply a case study methodology to analyse the transformation of three Spanish subsidiaries of European multinational companies into springboard subsidiaries to pursue opportunities in the Latin American region. Findings: The results present evidence that the development of a springboard subsidiary’s role is influenced by a set of preliminary factors that include: (1) the coincidence of a favourable economic change in the target region of expansion and unfavourable market conditions in the springboard subsidiary’s home market; (2) location-specific advantages of a subsidiary that allow it to develop unique capabilities, such as the ability to reduce the psychic distance between the headquarters and target region, to balance intra-regional conflicts within the target region, and to effectively transfer knowledge from the headquarters to the target region; and (3) micro-political headquarters-subsidiary negotiation processes as a result of the subsidiary’s strong initiative, peculiarities of the structure of a multinational company, and a strong dependency of the headquarters on the subsidiary’s unique capabilities. Originality/value: The study contributes to the International Business literature by providing an in-depth analysis of the evolution of springboard subsidiaries and explaining how ordinary subsidiaries located in saturated markets can trigger organisational change and achieve the extension of their strategic role.