PhD ceremony Mr. V.D. Vo: Subsidiary decision-making autonomy in multinational enterprises

PhD ceremony: Mr. V.D. Vo

Dissertation: Subsidiary decision-making autonomy in multinational enterprises

Promotor(s): prof. S. Beugelsdijk

Faculty: Economics

The distribution of decision-making autonomy over headquarters and subsidiaries is an important strategic decision that many firms need to make. This study disentangles causes and consequences of decision-making autonomy with special reference to subsidiaries in Central and Eastern Europe. The overall conclusion from this study is that multinational enterprises face a trade-off: when distance to the host country increases it is likely that the headquarters relies on the subsidiary for local expertise and knowledge, especially in institutionally thick countries where local embeddedness is important. With increasing distance, however, the degree of decision-making autonomy will go down, whereas to increase innovation both low or high levels of subsidiary decision-making autonomy are actually best, especially when subsidiary�s external embeddedness is high. This overall conclusion is a reflection of a well-known tension in the corporate reality of international business and management, namely how to balance local responsiveness with global coordination and integration. This study provides novel insights on how subsidiary decision- making plays a pivotal role in understanding this tension and formulating an appropriate response to it.