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 language | English (US) |
|---|---|
| Pages (from-to) | 111-130 |
| Number of pages | 20 |
| Journal | Journal of International Business Studies |
| Volume | 45 |
| Issue number | 2 |
| DOIs | |
| State | Published - Feb 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
- Management of Technology and Innovation
- Strategy and Management
Cite this
Autonomy delegation to foreign subsidiaries : An enabling mechanism for emerging-market multinationals. / Wang, Stephanie Lu; Luo, Yadong; Lu, Xiongwen; Sun, Jinyun; Maksimov, Vladislav.
In: Journal of International Business Studies, Vol. 45, No. 2, 02.2014, p. 111-130.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Autonomy delegation to foreign subsidiaries
T2 - An enabling mechanism for emerging-market multinationals
AU - Wang, Stephanie Lu
AU - Luo, Yadong
AU - Lu, Xiongwen
AU - Sun, Jinyun
AU - Maksimov, Vladislav
PY - 2014/2
Y1 - 2014/2
N2 - 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.
AB - 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.
KW - emerging-market multinationals
KW - parentsubsidiary
KW - subsidiary autonomy
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UR - http://www.scopus.com/inward/citedby.url?scp=84894123571&partnerID=8YFLogxK
U2 - 10.1057/jibs.2013.40
DO - 10.1057/jibs.2013.40
M3 - Article
AN - SCOPUS:84894123571
VL - 45
SP - 111
EP - 130
JO - Journal of International Business Studies
JF - Journal of International Business Studies
SN - 0047-2506
IS - 2
ER -