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Determining Factors of Subsidiary Development

The literature on subsidiary development has greatly expanded over the last 20 years, evaluating the dynamics behind the evolution of subsidiary roles. The literature emerged out of a critique of the traditional ‘center-periphery’ view where the firm-specific advantages are developed and controlled by the parent company, while the foreign subsidiaries are the long-arm of the parent company in exploiting the firm-specific advantages in the local market. The observation that some subsidiaries have a strategic role in the multinational corporation (MNC) that reaches beyond their local undertakings (e.g. Etemad and Dulude, 1986; Bartlett and Ghoshal, 1989; Gupta and Govindarajan, 1994) was the starting point of research on different subsidiary roles and the evolution of subsidiary roles.