Centers of Excellence: The Role of Functions. The Agilent Technologies UK case

Over the last three decades, business literature has been focused on the different roles that a subsidiary may play within a Multinational Company (MNC). It is now widely accepted that to compete successfully in a modern economy, MNCs cannot consider all their subsidiaries as clones and mere executor of orders planned by the Headquarters (HQs); the importance of achieving economies of scale and having continuous innovation pushes the companies to leave a certain degree of autonomy - with reference to the internal competences and to the environment it belongs to - to each subsidiary. This differentiation leads to the recognition by the HQ of the different strategic roles and relative importance of the subsidiaries of the network. Following the work of Cocito, Gatta, Onetti and Majocchi (2003) “Subsidiaries within a high-tech MNC. A reappraisal of the role of function” about the Italian subsidiary of Agilent Technologies, the aim of this paper is to investigate whether the Scottish subsidiary (located in South Queensferry) can be considered a center of excellence, according to the definitions that have been proposed by the practitioner literature over the years, especially by those researchers -Birkinshaw and Morrison (1995), Frost, Birkinshaw and Ensign (2002)- who claimed that the role of functions should be revaluated in the definitions of subsidiaries typologies.
After a review of the practitioner literature (Chapter 1) on Subsidiaries roles (Paragraph 1.1) and Centers of Excellence (Paragraph 1.2) the paper introduces Agilent Technologies (Chapter 2) and especially the case study on the Scottish subsidiary located in South Queensferry (Chapter 3). The Methodology adopted (Chapter 4) is that typical of managerial researches (even though this work lacks of generalisation) and is conducted through a questionnaire, open questions and a series of interviews directed to the management of the subsidiary. The view of Frost, Birkinshaw and Ensign (2002) in “Centers of Excellence in Multinational Corporations” has been taken under consideration - with edits in order to comprehend a wider set of subsidiary characteristics: Distinctive capabilities/Recognition (Paragraph 5.1), Autonomy/Mechanisms of control (Paragraph 5.2) and Integration/Sharing of resources (Paragraph 5.3) - as a guideline for the Analysis (Chapter 5). The concluding chapter (Chapter 6) reports the different Conclusions on three value-adding Functions (R&D, Production, Marketing/Sales) of the subsidiary (Paragraph 6.1) and Final considerations (Paragraph 6.2) which confirm the assumptions: the subsidiary as whole cannot be considered a center of excellence but the R&D function and –with some reserves- the Production function can.