Autonomy, Embeddedness, and the Performance of Foreign Owned Subsidiaries

Abstract

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The Effects of Institutional Distance on Foreign-Owned Subsidiary Development: The Case of the Northwest of England

“…Secondly, this study can fall back on a census database of foreign-owned subsidiaries. This means that shortcomings of previous survey based studies, such as the focus on a limited number of home countries (Taggart & Hood, 1999;Gaur & Lu, 2007;McDonald et al, 2008), and potential non-coverage bias (Dillman, 2000;Yang et al, 2006) can be reduced.…”

Expatriates, subsidiary autonomy and the overseas subsidiary performance of MNEs from an emerging economy

“…For instance, McDonald, Warhurst and Allen (2008) find that there is a positive relationship between various degrees of subsidiary autonomy and performance. Ambos and Birkinshaw (2010) indicate that subsidiaries achieve superior performance by enjoying high levels of local decision-making authority, and by attracting the parent company's attention within the MNE network.…”

“…The subsidiary in turn will rely on its parent for resources and knowledge in order to minimise risk and external dependence in host countries with low quality institutions. This suggests that expatriates may serve as an internal control mechanism for an MNE parent and affect subsidiary autonomy, which in turn impacts on subsidiary performance (McDonald, Warhurst, & Allen, 2008). This implies that the effect of expatriates on organizational outcomes is more complex than the existing literature suggests.…”

“…Extant research shows that subsidiary autonomy granted by MNE parents has a positive impact on subsidiary performance (Gammelgaard, et al, 2012;Gomez & Werner, 2004;McDonald, Warhurst, & Allen, 2008). Most existing research has argued that less autonomy will discourage the subsidiary from fostering a higher level of organisational learning (Luo, 2003), reduce parent-subsidiary cooperation (Birkinshaw, et al, 2000), block knowledge creation (Young & Tavares, 2004) and hinder strategic leadership initiatives (Birkinshaw, Hood, & Jonsson, 1998).…”

“…Thus, expatriates not only affect knowledge transfer between the MNE parent and the subsidiary, but also subsidiary autonomy, which in turn influences subsidiary performance. Although the effect of subsidiary autonomy on subsidiary performance has become an important theme in international HRM research (Gammelgaard, et al, 2012;Gomez & Werner, 2004;Kawai & Strange, 2014;McDonald, Warhurst, & Allen, 2008;Slangen & Hennart, 2008), the mediating role of subsidiary autonomy in the relationship between the level of expatriates and subsidiary performance has been under-explored, especially in the case of EEMNEs. It is important to delineate the path from expatriates to subsidiary performance via subsidiary autonomy in host countries with different institutional environments, given that EEMNEs originated in under-developed institutional environments and they may respond to the institutional environments of host countries through altering internal control systems such as expatriate staffing and subsidiary autonomy.…”