Multinational Subsidiary Evolution: Capability and Charter Change in Foreign-Owned Subsidiary Companies

Abstract

In this article we develop a model of subsidiary evolution to shed light on the processes that drive changes in a subsidiary's activities and its underlying capabilities. We see subsidiary evolution as (1) the enhancement/depletion of capabilities in the subsidiary. coupled with (2) an explicit change in the subsidiary's charter. Building on, this definition, we analyze the interaction between capability and charter change and identify five generic subsidiary evolution processes, developing propositions around the underlying drivers for each process.