A Reconceptualisation of Ambidexterity: How Subsidiaries Can Use Their Capabilities and Knowledge to Build Subsidiary Bargaining Power

The literature on subsidiaries to date has focused largely on analysing autonomy, knowledge flows and firm specific advantages (Argote and Ingram 2000; Harzing and Noorderhaven 2006; Meyer, Wright and Pruthi 2009). An emerging stream of literature recognises the potential complexity of intra-organisational power within the MNC as warranting further investigation (Andersson, Forsgren and Holm, 2007; Bouquet and Birkinshaw, 2008; Mudambi and Navarra, 2004). It is held that as subsidiaries develop dynamic tacit capabilities which can be leveraged, their scope to exert influence and exercise subsidiary bargaining power increases concurrently. This raises some important questions for subsidiary managers, firstly can subsidiaries utilise their resource base to exert influence, and if so, what internal, external and network determinants drive this process? Bargaining power emanates from subsidiaries acquiring more independence in their operations in conjunction with increased resource accessibility. This bargaining process not only influences subsidiary-headquarter relationships but also has implications for subsidiary-subsidiary relationships when intra-unit competition exists (Mudambi and Navarra, 2004). Subsidiary network embeddedness and interdependencies therefore constitutes a key area of analysis, as does a subsidiary‟s capacity to assimilate knowledge and reconfigure resources. In building upon this platform a model of subsidiary bargaining power is presented, informed by current theory and a program of semi-structured interviews with subsidiary management in the ICT sector. The model advanced suggests that subsidiary ambidexterity is key to understanding the roots and origins of subsidiary bargaining power within the MNC. The subsidiary demonstrating ambidexterity achieves alignment between its current operations and the adaptability needed to affectively compete amid changing environmental conditions. Ability to respond and scope to respond, as a dual construct, are presented as capturing the dynamic tenets of ambidexterity in a more robust manner than has been conceptualised to date. It is advanced that incorporating ambidexterity as an antecedent of bargaining power provides a new lens through which subsidiary influence can be examined. In addition, the linkages between adaption and the restructuring of resources facilitated through ambidexterity may provide further insight into the determinants and sources of strategic learning.