Conclusion
Extant research in subsidiary entrepreneurship has focused on selling, evaluation and approval of opportunities, while overlooking how these opportunities were identified in the first place. We attempt to fill this gap by examining the opportunity identification phase of subsidiary entrepreneurship process to understand what kind of entrepreneurial opportunities exists, and we suggest appropriate strategies to exploit them. Drawing upon subsidiary entrepreneurship literature, institutional perspective, and entrepreneurship literature, this paper examines the types of entrepreneurial opportunity in the context of subsidiary entrepreneurship through an institutional distance lens. We argue that subsidiaries have unique advantages to identify entrepreneurial opportunity through informational asymmetry advantage and subsidiary alertness. Furthermore, we propose a contingency perspective on the different types of opportunity with respect to degrees of uncertainty as well as the legitimacy requirement in the host country's institutional environment. Finally, we suggest appropriate strategic approaches that subsidiaries can adopt to exploit these opportunities. This paper makes the following theoretical contributions. First, this paper extends the field of subsidiary entrepreneurship by examining different opportunities that subsidiaries can identify in the host country environment and suggesting appropriate strategies to exploit them. Through consideration of the institutional context of the host and home country, as well as the business process of the host country, three views on entrepreneurial opportunities – allocative, discovery, and creative – are discussed in terms of the level of uncertainty in identifying and meeting unmet needs in the host country, as well as the level of legitimacy requirements to fulfill that need. Specifically, the allocative view has the least amount of uncertainty since both ends and means (and both supply and demand) are known and the main challenge is to identify how these ends and means can be matched up using the existing market, thus making the legitimacy requirements for this quite low. To effectively exploit this opportunity, the subsidiary strategy should therefore be arms-length relationships such as importing, franchise, or licensing as these need low levels of interdependence and minimal interaction between the parties involved in the transactions.
