Subsidiary Task and Subsidiary Autonomy

Abstract

It was argued in Chapter 1 that the relationship between headquarters and subsidiaries is central to the understanding of the functioning of multinational corporations and, as several authors have pointed out (Birkinshaw, Hood and Jonsson, 1998; Enright, 2000; Edwards, Ahmad and Moss, 2002), the subsidiary is playing an increasingly important role in generating competitive advantage for the overall MNC. The sometimes conflicting and sometimes cooperative nature of this connection has become a significant concern in international management. The ambivalence in the relationship frequently arises because the subsidiary requires or desires a degree of autonomy of decision-making that the HQ is not always disposed to concede. Over the last two decades, subsidiary autonomy has been the subject of considerable academic research. An important outcome of the nature of the task that the subsidiary performs on behalf of the overall corporation is its connection with the subsidiary’s level of autonomy. The first contribution of this chapter is to investigate the relationship between level of subsidiary autonomy and subsidiary task in the context of the range of strategies available to the MNC. The second results from subsidiary autonomy being a phenomenon independent of the factors used to derive the subsidiary task clusters in Chapter 6. Hence, by testing hypotheses regarding the task-autonomy relationship the investigation also adds important external validation to the clusters derived in Chapter 6.