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The autonomy of foreign subsidiaries. An analysis of headquarter-subsidiary relations

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Abstract:

This article challenges the idea that headquarter-subsidiary relations of multinational corporations (MNCs) are purely hierarchical, represented by the traditional understanding of MNCs, or purely decentralized, as stated in some recent literature. The degree of autonomy of subsidiaries varies between MNCs, and this heterogeneity reflects differing structures and strategies in firms operating in an international economy. Our analysis is based on a postal survey, including data from 225 foreign-owned subsidiaries located in non-metropolitan Norway. The analysis shows that foreign subsidiaries can have different positions of autonomy. When analysing possible explanations for differences of autonomy, we found that year of establishment and management style best explained why some subsidiaries have a more autonomous position than others. We also found that subsidiaries with a high degree of autonomy are more involved in co-operation with other firms in the region than their lower autonomy counterparts. The paper is organized in three sections: i) theoretical explanations of connections between foreign direct investment strategies, organizational structure and regional linkages, ii) empirical evidence, and iii) concluding remarks. The last section adds new elements to theĀ­theoretical debate, and also suggests some issues for future research.

Keywords: autonomy; foreign subsidiaries; multinational corporations; non-metropolitan Norway; regional linkages

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00291950310000794

Publication date: January 1, 2003

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