The microfoundations of subsidiary initiatives: How subsidiary manager activities unlock entrepreneurship

Abstract

Research Summary: We use a microfoundations lens to challenge the assumption of a simple relationship between organizational-level context (subsidiary entrepreneurial orientation) and entrepreneurial outcomes (initiative realization). Drawing on middle manager and subsidiary literature, we argue that the strategic activities of the subsidiary's central actor, the subsidiary CEO (referred to as the subsidiary manager), translates the benefits of subsidiary entrepreneurship for initiative realization. We test this mediating effect of subsidiary manager micro-level activities on data from 186 individuals. The results of our multilevel mediation analysis show that micro-activities of subsidiary managers mobilize subsidiary entrepreneurship for initiative realization, “downward” through facilitating subsidiary adaptability and “horizontally” through enabling embeddedness in the local environment. Our findings also challenge the accepted value of “upward” championing alternatives. Revealing the centrality of subsidiary manager activities for unlocking entrepreneurship demonstrates the value of adopting a microfoundations lens for understanding organizational phenomena. Managerial Summary: Multinational companies (MNCs) increasingly expect their subsidiary units to contribute through realizing initiatives, such as new product, service, or process designs. Such outcomes are encouraged through a supporting organizational context for entrepreneurship. But to understand how an entrepreneurial context translates into realized initiatives demands that we apply a microfoundations lens and consider the activities of the subsidiary's central actor, the subsidiary chief executive officer—referred to as the “subsidiary manager.” The subsidiary manager is responsible for mobilizing the subsidiary to develop relationships to access the knowledge, ideas, and opportunities implicit in the initiative process. Revealing the impact of these micro-activities advances our understanding of how to liberate the benefits of entrepreneurship for realizing initiatives. This study offers key insights for both subsidiary managers and headquarters.