Background:

MNEs are more relevant than ever in today’s economy as MNEs stand for one third of global production and 50% of global exports. In Sweden there are roughly 3 958 Swedish owned international companies with at least one subsidiary abroad. As the world has become interconnected and digitalization makes it easier for MNEs to gain customers, the competition has grown tremendously. Subsidiaries within MNEs play a vital role in enhancing competitive advantage through strategic embeddedness and competence development. The vast expansion of MNEs comes of course with problems when expanding quickly and creating subsidiaries. New questions arise as they must choose what market and entry mode they want to conduct, how to utilize, manage, and align the subsidiaries abroad. 

Problem:

The thesis formulates a research problem by reviewing literature on the topic of internationalization, entry modes, and HQ-subsidiary relationships. It finds that the influence that entry modes have on HQ-subsidiary is an under-researched subject. Most studies on this subject are quantitative studies, so this thesis aims to contribute to the discussion by providing findings from a qualitative approach.

Purpose:

The objective of this thesis is to develop insights on relationship dynamics between headquarters and subsidiaries in MNEs, and to illustrate how these interactions vary with the choice of entry strategy.

Research question:

“What influences does entry modes have on HQ-subsidiary relationships”.

Method:

This thesis adopts a relativist ontology and a social constructionist epistemology. A holistic multiple case study was used, and qualitative data was gathered from four case companies through eleven semi structured interviews. When the data was collected, a thematic analysis was conducted on each of the cases, which generated codes, which are grouped into sub-themes, and then into within-case themes. After this a cross-case analysis was conducted, where the within-case themes were grouped into cross-case themes. These cross-case themes then in the next step turned into the main themes which serve as the foundation for the analysis. 

Conclusion:

This thesis aimed to explore what influences entry modes has on HQ-Subsidiary relationships, which led to the development of the Jönköping Entry-Relations Model. The research involved discussions with managers at both HQs and subsidiaries, leading to the identification of a process starting from internationalization catalysts to strong relationships and a sense of unity. While entry modes serve as triggers for relationship dynamics, the research found that other factors play a more substantial role in shaping HQ-Subsidiary interactions. Entry modes indirectly influence relationships by presenting challenges that firms must address to foster unity. This thesis contribution to the literature underscores that regardless of entry mode, organizational unity remains the goal. Therefore, while entry modes initiate distinct challenges, they do not directly dictate relationship outcomes.