From Federations to Global Factories: Assessing the Contribution of the Subsidiary Middle Manager in Today’s MNE

The evolution of MNEs (Multinational Enterprises) from rigid and hierarchical structures to more distributed authority and autonomy led to the theoretical justification for conceptualising them as a federative rather than unitary organisations (Ghoshal and Bartlett, 1990). Fundamental to the Federative MNE is the suggestion that subsidiary units, through their own actions, can modify the power base and influence MNE strategy ‘from below’ (Andersson et al., 2007). Considerable research highlights the potential of subsidiary units for knowledge creation and initiative (Birkinshaw, 1997, Rugman and Verbeke, 2001, Williams, 2009), but to date it has failed to confirm that MNEs actually operate as federations.The research objective in this paper is to access the impact MNE structural developments are having on subsidiary strategy development. The actors and practices that contribute to strategy development at the subsidiary level is already a neglected research area (Dörrenbächer and Geppert, 2009). Although the essence of strategy is contributing to competitive advantage through management activities (Papadakis et al, 1998), much of the focus of research up to this point has been on the strategic relationship between subsidiary top management and corporate headquarters (Bouquet and Birkinshaw, 2008). The contribution to strategy development by the middle management levels within subsidiaries has largely been overlooked (Balogun, 2003). Using Floyd and Wooldridge’s (1992) model of middle manager strategic influence in organisations, the focus of this paper is to analyse the contribution of subsidiary middle managers and contribute to the underdeveloped literature on subsidiary strategy development, in a time when theory development on the MNE is moving away from the “Federation” towards the “Global Factory”.