Independent Initiatives of Danish and Norwegian Manufacturing Subsidiaries: A quantitative study mapping the subsidiary initiatives of Danish and Norwegian manufacturing industries

Daniel Ruff

Student thesis: Master thesis

Abstract

Executive summary: Situation: Boston Consulting Group in April 2013 released a report stating that Denmark and Norway will have lost 60.000 and 24.000 manufacturing jobs by 2020 respectively. This is a huge value loss to the two Nordic economies. To stop this continued loss, local manufacturing subsidiaries need to increase their value creation for the parent MNE so that offshoring becomes the less value creating option. The method to increase subsidiary value creation is through subsidiary initiatives, i.e. independent entrepreneurial actions by the subsidiary. Research goal: This research tries (1) to identify whether Danish and Norwegian subsidiaries have realized subsidiary initiatives and whether they will realize subsidiary initiatives in the near future. Further the current paper analyzes (2) what aspects of subsidiary management and the headquarter-subsidiary relationship influence the realization of subsidiary initiatives. The findings try to answer these inquiries and will hopefully allow a deeper understanding of the value creation through initiatives by manufacturing subsidiaries. Methodology: The research was based on a structured questionnaire answered by a total of 69 random managers in Danish and Norwegian manufacturing subsidiaries. The quantitative data received through the survey then was analyzed using statistical methods such as t-Tests for comparing groups and regression analyses to identify correlations between certain aspects. Findings: The research found that (1) Danish and Norwegian manufacturing subsidiaries have been realizing and do realize subsidiary initiatives. However as history shows, the amount of subsidiary initiatives realized does not suffice to stop the offshoring. The current study found that as to increase the amount of initiatives realized, (2) subsidiaries should hire management that has held a corporate position before and has many years of leadership experience. Further the subsidiary should increase the amount of capabilities and functions conducted within the subsidiary, as well as the subsidiary should increase its autonomy from the headquarters whenever possible as to increase its opportunity to take action and thus, to realize subsidiary initiatives.. Subsidiaries doing this, according to the findings, will increase the amount of initiatives realized within. This in turn will increase the value created by the subsidiary for the parent MNE, which in turn will render offshoring less likely. These findings will allow a better understanding of value creation in subsidiaries. Further it creates a basis for further research on the relation of offshoring and value creation through initiatives.

EducationsMSc in International Marketing and Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2014
Number of pages90