Autonomy delegation to foreign subsidiaries: An enabling mechanism for emerging-market multinationals

Stephanie Lu Wang, Yadong Luo, Xiongwen Lu, Jinyun Sun, Vladislav Maksimov

Research output: Contribution to journalArticle

58 Scopus citations

Abstract

Current theory on foreign subsidiary autonomy is insufficient to examine a situation where a multinational lacks experience to organize global operations, and yet intends to compete extensively with established multinational enterprises (MNEs) from advanced economies. By building on theoretical perspectives developed for emerging-market multinational enterprises (EMNEs), we advance the idea that foreign subsidiary autonomy is a strategic mechanism to overcome the EMNE's weaknesses in managing globally dispersed businesses and their home-country disadvantages after foreign entry. Subsidiary autonomy delegation assists in performing the learning functions necessary for overcoming resource and capability voids, as well as for distancing the subsidiary administratively from the parent's negative home-country institutional heritage. Analyses of survey data collected from headquarter senior executives of 240 Chinese MNEs suggest that subsidiary autonomy delegation is higher among firms relying on foreign markets as a springboard to acquire strategic assets, whose top managers at the headquarters perceive high domestic institutional constraints, and which do not count on government assistance to expand internationally. Further, we demonstrate that these relationships are strengthened with greater inward foreign direct investment cooperative experience, and with the use of merger and acquisition entry modes. These findings have important implications for theories on subsidiary autonomy.

Original languageEnglish (US)
Pages (from-to)111-130
Number of pages20
JournalJournal of International Business Studies
Volume45
Issue number2
DOIs
StatePublished - Feb 1 2014

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Keywords

  • emerging-market multinationals
  • parentsubsidiary
  • subsidiary autonomy

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

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