Local Context and Global Strategy: Extending the Integration Responsiveness Framework to Subsidiary Strategy

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Abstract

The integration-responsiveness (IR) framework is a leading analytical tool of global strategy but it is less valuable in explaining the heterogeneity of strategic choice for subsidiaries within an MNE. We propose an IRE framework of subsidiary strategy that complements the IR framework for the subsidiary level with a third dimension—selling to local versus export markets (E). Resource-based considerations suggest that subsidiary strategies must fit the resources both the parent MNE and the local context. We examine how our three dimensions of subsidiary strategy are locally contingent. We suggest that local resource endowments, local competition, and the distance between the home and host country influence the use of responsiveness and exporting strategies, but influence integration strategies only to a small degree. We find empirical support for hypotheses developed from these arguments using survey data from MNE subsidiaries in two Central and Eastern European economies.

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