From Shallow Resource Pools to Emerging Clusters: The Role of Multinational Enterprise Subsidiaries in Peripheral Areas

Abstract

Pressured by heightened competition, multinational enterprises (MNEs) are discovering pockets of resources in non-traditional locations. This study proposes a dynamic model explaining the role of MNE subsidiary entry timing, entry mode and mandate in the process of transforming a peripheral area of an advanced market economy into an ‘emerging cluster’, a location where internal (local) resources and external (international) connectivity have been established, but are not yet mature. Illustrative cases relating to a period of almost five decades from a peripheral European Union area support the conclusion that MNEs’ strategies are critical in transforming shallow resource pools into emerging clusters.

Keywords: Peripheral areas, Shallow resource pools, Emerging clusters, Subsidiary entry timing, Entry mode and mandate

JEL Classification: F23, R11, R58