1. ¹Center for Strategic Management and Globalization, Copenhagen Business School, Frederiksberg, Denmark
2. ²Kelley School of Business, Indiana University, Indianapolis, USA

Correspondence: CG Asmussen, Center for Strategic Management and Globalization, Copenhagen Business School, Porcelænshaven 24, 2000 Frederiksberg, Denmark. Tel: +45 3815 3034; Fax: +45 3815 3035; E-mail: cga.smg@cbs.dk

Received 29 December 2006; Revised 8 March 2007; Accepted 23 August 2007; Published online 10 July 2008.

Abstract

We extend the "centers of excellence" concept to address the diversity and multidimensionality of subsidiary competence. Using Rugman and Verbeke's diamond network model, we hypothesize the contingencies influencing the links between host-country environments and subsidiary competence configuration, and provide evidence from more than 2000 subsidiaries in seven European countries. Our results provide new insights into how multinational enterprises can overcome "unbalanced" national diamonds by acquiring complementary capabilities across borders.