Understanding the impact of Brexit: The case of foreign software corporations in Scotland and South East England

Abstract

Market and institutional shocks and upheaval, brought about by political, economic and social changes, have the potential to generate significant corporate restructuring. Foreign subsidiaries are particularly vulnerable to such impacts given the embeddedness of parent companies in their home countries, with the potential for disinvestment and regional decoupling. This paper examines the impact of the Brexit vote and negotiation period on UK-based foreign subsidiaries in the software and software-related sectors in Scotland and South East England. This firm-centric approach follows recent evolutionary thinking that restates the importance of examining the firm as a means by which to understand how regions respond to such disturbances. Rather than simply examine impact, the paper is concerned with why the scope and scale of impacts are mediated by particular corporate and global production networks (GPN) processes. Key to this is the examination of the importance of the value creation corporate role and degree of replication within the corporation (specificity), the GPN spatial configuration, and the markets that subsidiaries are mandated to serve. The paper concludes that a variety of impacts are evident, but that notable negative consequences have arisen for subsidiaries with low corporate specificity, working through European Union (EU)-configured GPNs, and serving European markets. These negative impacts are more notable in Scotland, compared with South East England where a large minority have experienced no detrimental impacts.