Managing The Dual Business Model Trade-off In Multinational Corporations

When a multinational operates different business models in different markets, a trade-off is typically made between local market adaptation, and cross-market economies of scale and scope. How do country managers navigate the trade-offs and tensions inherent to developing and operating such dual business models? In this article we explore how a local subsidiary can innovate its business model in a way that creates alignment with the local market, while respecting the larger corporate structure. We study the Chinese subsidiary of a European multinational manufacturer in the building industry, that has transformed its business model from simple production, to engineering, and further to modular solutions. We show that with a combination of respecting the corporate strategic mission, respecting the corporate culture, and avoiding to directly challenge the core corporate business model, the subsidiary has bypassed the tensions commonly observed with dual business models.