Configuration and Coordination at Subsidiary Level: Foreign Manufacturing Affiliates in the UK

This paper develops Porter's (1986) well-known configuration/coordination paradigm for strategy at corporate level into a model that may be applied to identify and evaluate strategy at subsidiary level. Four strategy types are identified: detached subsidiary (corresponding to Porter's export-based corporate strategy), autarchic subsidiary (corresponding to the country-centred corporate strategy), confederate strategy (corresponding to high foreign investment with extensive coordination), and the strategic auxiliary (purest global strategy). Empirical data were obtained from a postal survey of 500 randomly chosen foreign manufacturing affiliates in the UK, of which 171 responded. The proposed strategy types were identified using cluster analysis and verified using analysis of variance. The four subsidiary strategy types were found to be separated by a number of operational variables including market scope, flows of material inputs and outputs, the nature of manufacturing technology employed and the degree of R&D complexity. The proposed framework was thus found to be useful and robust.