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Subsidiary strategy is a concept which has emerged in international business literature but research has so far failed to explain how subsidiary managers develop strategy under the constraints of the paradoxical pressures they face in today’s Multinational Enterprises (MNE). On the one hand current trends suggest that (MNE) are developing into more global business structures which are reducing the power and influence of subsidiary managers (Buckley, 2009, Buckley & Ghauri, 2004, Mudambi, 2008). The result of these trends, are that the market orientated aspects of subsidiary strategy are becoming constrained and to some degree taken out of the hands of the subsidiary managers. This is an important development on its own, but what makes it truly remarkable is that simultaneously there is a broad empowerment trend in management practice, through which subsidiary managers are being encouraged to act more entrepreneurially and to contribute knowledge and innovation to the entire MNE (Birkinshaw & Pedersen, 2009, Ghoshal & Bartlett, 1997, Verbeke, Chrisman, & Yuan, 2007). This creates a tension for subsidiary managers who are finding their choice of customers and markets increasingly constrained by MNE structural developments, while at the same time being pressurised by headquarters to produce initiatives (Birkinshaw, 1997, Williams, 2009) and develop subsidiary specific advantages (Rugman & Verbeke, 2001). Research needs to address how subsidiary management develop strategy while coping with these conflicting demands. The subsidiary is a unique context to study management processes relating to strategy but …