The evolution of subsidiaries: the case of michelin in Thailand

This study has investigated the evolution of Michelin Siam Group (MSG), a Thai subsidiary of the Michelin Group (France),over the period between 1987 and 2007. Particular attention has been given to the process of changing subsidiary roles aswell as factors influencing the process. The study has adopted a qualitative case-study approach based on the datacollected from interviews of senior managers at MSG.The analysis has demonstrated that over the past 20 years, MSG has undergone several changes in its charters andcapabilities, with the changes in its roles accordingly. In its early years (pre-1997), MSG was a ‘local implementer’ in itsMNC network, mainly serving the local market in a limited range of product lines mandated by the headquarters (HQs). Itscharters, both manufacturing and commercial charters, have since been extended to cover broader product lines andinternational markets beyond Thailand through the accumulation of production capabilities enhanced by a range of trainingprogrammes. MSG has thus increasingly shifted from a ‘local implementer’ to a ‘regional/global implementer’.More importantly, it has also been revealed that the changes in MSG’s roles have been strongly influenced by the HQs.Through its control over decision making, the HQs has been heavily involved in introducing changes at MSG. However, therole of subsidiary, industry, and local environment factors should not be neglected. MSG’s increasing capabilities andsuperior performance coupled with the favourable and dynamic local environment as well as the competitive nature of anindustry have been found to have instigated HQs’ favourable decisions for MSG. While the HQs has been the dominantdriver of MSG’s roles and changes in its roles, the findings of this study largely appear to support the influences of theinterplay of corporate, subsidiary, industry, and local environment factors in shaping subsidiary roles over time