Subsidiary‐specific advantages in multinational enterprises

Abstract This paper discusses the internal patterns of competence building in the multinational enterprise (MNE), with a focus on the creation of capabilities in its foreign subsidiaries. We present a new framework to synthesize 10 types of MNE–subsidiary linkages leading to capability development. We find that several of the 10 capability development processes are associated with subsidiary‐specific advantages. We discuss the process of subsidiary‐specific advantage development within the organizational structure of the MNE when it is a differentiated network of dispersed operations. Copyright © 2001 John Wiley & Sons, Ltd.