Resource Flows within Multinational Corporations: Implications for Subsidiary Strategy

Jiatao LiTrond Randøy, Trond Randøy

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Built on the network conceptualization of the multinational corporation (MNC) in the literature, this paper explores three sets of intra-MNC resource flows that facilitate global integration: capital, knowledge, and product flows. By considering both the direction and intensity of the resource flows, this paper presents a framework for analyzing the strategic roles of foreign subsidiaries. We explore this framework with data on U.S. subsidiaries of foreign companies in 46 manufacturing and service industries and 24 MNC home countries. Differences in subsidiary roles are analyzed along two dimensions: the extent to which the subsidiary is a provider of resources to, or a user from, the MNC network. The results provide strong support for differentiated subsidiary roles in relation to the direction and intensity of intra-MNC resource flows. This framework provides managers with better understanding of global integration across subsidiaries.

Keywords

Round Building

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