The influence of subsidiary strategic role on manager‘s mindset

This paper examines how the strategic role assigned to a Multinational Corporation (MNC) subsidiary influences its managers' interpretation of environmental changes. Using Gupta and Govindarajan‘s model, subsidiaries are classified by their strategic context, while Porter‘s Five Forces framework is applied to categorize changes in the competitive environment—specifically focusing on the expansion of the European Union (EU). The analysis reveals that a subsidiary's strategic role significantly affects its perception of the environment. Subsidiaries acting as knowledge creators (high knowledge outflows) perceived the EU expansion as a more significant competitive shift compared to those with low knowledge outflows. The study concludes that being a knowledge generator shapes a specific organizational mindset regarding external market disruptions.