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What are the consequences of initiative-taking in multinational subsidiaries?

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Author Info

  • Tina C Ambos

    (Department of International Management, Johannes Kepler University, Linz, Austria)

  • Ulf Andersson

    (Center for Strategic Management and Globalization, Copenhagen Business School, Frederiksberg, Denmark)

  • Julian Birkinshaw

    (Strategic and International Management, London Business School, London, UK)

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    Abstract

    The phenomenon of subsidiary initiative has received increasing attention in recent years, but the consequences of initiatives and the associated dynamics of headquarters–subsidiary relationships have received much less research attention. Building on resource dependence theory and self-determination theory we argue that two basic goals subsidiary managers pursue are to achieve autonomy vis-à-vis corporate headquarters, and influence over other units. We investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters’ response – through granting attention or monitoring – affects the realization of the subsidiary's goals. Using structural equation modeling, our hypotheses are tested by drawing on a sample of 257 subsidiaries located in three different countries (Australia, Canada and the United Kingdom). Our results show that subsidiaries are not able to increase their influence through initiatives unless they get headquarters’ attention. We also find that subsidiary initiatives have a direct effect on subsidiary autonomy, but the caveat is that initiatives also evoke headquarters monitoring, which in turn decreases the subsidiary's autonomy. In addition to providing insights into how subsidiaries can achieve their goals, the paper also sheds light on the critical role headquarters plays in leveraging initiatives, and the influence of individual subsidiaries in the multinational enterprise.

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 41 (2010)
    Issue (Month): 7 (September)
    Pages: 1099-1118

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    Handle: RePEc:pal:jintbs:v:41:y:2010:i:7:p:1099-1118

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    Web page: http://www.palgrave-journals.com/

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    Cited by:
    1. Dimitratos, Pavlos & Plakoyiannaki, Emmanuella & Thanos, Ioannis C. & Förbom, Yrjö Kristian, 2014. "The overlooked distinction of multinational enterprise subsidiary learning: Its managerial and entrepreneurial learning modes," International Business Review, Elsevier, vol. 23(1), pages 102-114.
    2. Najafi-Tavani, Zhaleh & Giroud, Axèle & Andersson, Ulf, 2014. "The interplay of networking activities and internal knowledge actions for subsidiary influence within MNCs," Journal of World Business, Elsevier, vol. 49(1), pages 122-131.
    3. Narula, Rajneesh, 2013. "Exploring the paradox of competence-creating subsidiaries: balancing bandwidth and dispersion in MNEs," MERIT Working Papers 046, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Collinson, Simon C. & Wang, Rowena, 2012. "The evolution of innovation capability in multinational enterprise subsidiaries: Dual network embeddedness and the divergence of subsidiary specialisation in Taiwan," Research Policy, Elsevier, vol. 41(9), pages 1501-1518.
    5. Achcaoucaou, Fariza & Miravitlles, Paloma & León-Darder, Fidel, 2014. "Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness," International Business Review, Elsevier, vol. 23(1), pages 76-90.

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