Subsidiary Upgrading? Strategic Inertia in the Development of German-owned Subsidiaries in Hungary

AbstractThis study reports the results of interviews with 65 managers in 11 Germanheadquarters and in their 13 Hungarian subsidiaries. We focused on the role of thesubsidiary with regard to market, product and value-adding mandates. Further, weinvestigated whether the Hungarian subsidiaries had experienced an upgrade of theirrole during the first 10 years of transition. The host country economy was supportive torole development, but inadequate subsidiary capabilities and headquarters' assignmentsprevented the subsidiaries from being upgraded. We propose that the corporate immunesystem, ie, ethnocentric behaviours emanating from the headquarters should be includedin future upgrading analyses.