Strategic drivers behind the digital transformation of subsidiaries: a longitudinal approach

This study explores the strategic drivers of digital transformation (DT) at subsidiaries. Our research framework derives strategic drivers from a tripod model that integrates the resource-based, the institution-based, and the industry-based views. We use two longitudinal case studies at global automotive suppliers' Hungarian subsidiaries. We found that each view highlights a different set of strategic drivers. DT in the subsidiaries is boosted by proactive local management and mature process improvement routines (dynamic capabilities); parent-pull relation (internal institutions) and state support attracting manufacturing FDI (external institutions); as well as buyers' increasing expectations and supplier-related factors (industry-based view). By combining these views, we claim that drivers related to the external institutional context and the industrial competition are usually filtered by the global management before contributing to resource adjustments at subsidiaries in a coercive top-down manner. Despite this seemingly deterministic DT process, local managements can actively shape DT, even that of the MNE.

Automated summary

This study investigates the strategic drivers of digital transformation in subsidiaries. The research framework combines the resource-based, institution-based, and industry-based views to determine these drivers. Two longitudinal case studies conducted at Hungarian subsidiaries of global automotive suppliers revealed that each view emphasizes different strategic drivers. The subsidiaries' digital transformation is propelled by proactive local management and established process improvement routines (dynamic capabilities); a parent-pull relation (internal institutions) and state support attracting foreign direct investment (external institutions); as well as increasing buyer expectations and supplier-related factors (industry-based view). By integrating these views, it is argued that drivers related to the external institutional context and industry competition undergo filtering by global management before contributing to resource adjustments at subsidiaries in a top-down manner. Despite the seeming determinism of the digital transformation process, local managements can actively shape digital transformation, even that of multinational enterprises.