Capability-Building of Foreign Subsidiaries under the International Functional Division of Labor : A Case Study of a Japanese HDD Manufacturing Company

  • OKI Kiyohiro
    Graduate School of Economics, Faculty of Economics, The University of Tokyo

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Other Title
  • 国際機能別分業下における海外子会社の能力構築 : 日系HDDメーカーの事例研究
  • コクサイ キノウ ベツ ブンギョウ カ ニ オケル カイガイ コガイシャ ノ ノウリョク コウチク ニッケイ HDD メーカー ノ ジレイ ケンキュウ

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Abstract

Recently, some Japanese companies have established the system of international functional division of labor that domestic bases specialize in research and development while foreign subsidiaries specialize in mass-production. Under the international functional division of labor, foreign subsidiaries are thought as more important because they exclusively mass-produce. Therefore, capability-building of foreign subsidiaries becomes a more important task for multinational companies (MNCs) under the international functional division of labor. It is known that support from domestic bases is important for Japanese foreign subsidiaries to develop their capability. However, the existing researches about Japanese companies have never focused on MNCs under the international functional division of labor. The relationship between domestic bases and foreign subsidiaries in MNCs under the international functional division of labor is very different from that in MNCs which is not under that. Therefore this difference can cause some problems in support from domestic bases for capability-building of foreign subsidiaries. In this article, I set it as the purpose of this research to clarify "the problems which may arise when domestic bases support capability-building of foreign subsidiaries which face an environmental change under the international functional division of labor". To attain this purpose, I perform a case study on alpha company, one of Japanese hard disk drive manufacturers. From this case study, I clarify that the international functional division of labor includes two factors which can hinder domestic bases from supporting capability-building of foreign subsidiaries which face an environmental change. These factors are "the bias of information selection" and "the difference of environment which each company faces", both of which are caused by the division of labor. And I also clarify that the international division of labor also can hinder capability-building of foreign subsidiaries which face an environmental change by hindering support from domestic bases. From these findings, I insist that the international functional division of labor isn't necessarily a desirable organizational structure from a dynamic viewpoint based on capability-building of foreign subsidiaries. Therefore MNCs which select the international functional division of labor should consider a way to overcome the problem included the international functional division of labor.

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