Introduction

As a firm internationalizes, it builds a network of operations that creates value by exploiting markets and seeking resources and sources of knowledge that are themselves internationally distributed. This network of operations develops over time. Subsidiaries contribute to the overall MNC through their initial charter and set of capabilities handed to them by the corporation during the establishment phase. Over time, subsidiaries may subsequently attempt to extend their charter and capabilities and develop their influence and power within the MNC. Prior research has shown that subsidiary power enhancement may happen in a variety of ways, for example, as a result of embedment in host country business networks (Andersson et al. 2007), through internally driven capability development and local initiatives (Birkinshaw 2000), or seeking control over resources and gaining centrality in strategic networks (Bouquet and Birkinshaw 2008; see also chapters of Sorge and Rothe and Williams and Geppert in this volume). Recent research has highlighted micro-political negotiations between subsidiary and headquarters as an important determinant of subsidiary role development (Dörrenbächer and Gammelgaard 2006), placing a spotlight on the actual interests and goals of key subsidiary managers (Dörrenbächer and Geppert 2009). These explanations of subsidiary power development draw on a behavioral logic: it is ultimately individual subsidiary manager interactions with other actors within the MNC that cause power to ebb and flow.