When the parent imitates the child: Strategic renewal through separation and reintegration of subsidiaries

Abstract

This article shows how the separation and subsequent reintegration of a subsidiary becomes a source of strategic renewal for the parent company. We develop a process model that reveals how structural ambidexterity can generate “proximate isomorphism” that gives rise to parent level exploration and the parent’s gradual convergence with the subsidiary. This creates the conditions for reintegration, and ultimately, strategic renewal. We identify the triggers for proximate isomorphism as well as the mechanisms through which it unfolds. We draw on the longitudinal analysis of strategic renewal of Immochan between 2006 and 2018. Our findings contribute to extant research by developing the link between structural ambidexterity and strategic renewal and, particularly, by showing that proximate isomorphism acts as an integrating mechanism between the parent and the explorative unit.