ABSTRACT
Although these models state the importance of integration, they pay rather little attention to the problem of transforming the capabilities developed on the subsidiary level into competitive advantages of the whole corporation. Gupta and Govindarajan (1994) recognize multinational corporations as networks of different flows, where different subsidiaries play different strategic roles which can be organized by the management in order to fulfill certain strategic goals. This model does not take the subsidiaries external network into account and is therefore not recognizing the influence from important business counterparts on subsidiary behavior. For instance, why would a subsidiary use its resources for corporate needs instead of further enhancing its competence to meet local needs?
