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Autonomy and Performance of Foreign Subsidiaries in five Transition Countries

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  • Urmas Varblane
  • Katrin M??nnik
  • Helena Hannula

Abstract

The paper analyses the link between the autonomy according to business function and the performance of foreign subsidiaries in Slovenia, Poland, Hungary, Slovakia and Estonia. The novelty of the paper is in the deeper investigation of the multidimensionality of autonomy. Using the method of principal components, four business function factors relating to autonomy were obtained (technology, marketing, management, finance). The results supported the argument that the relationship between autonomy and performance depends on the type of autonomy. Marketing and finance are the most powerful dimensions of autonomy. Higher autonomy in marketing is negatively linked with technology upgrading, measured by productivity level, improvement of technological level of production equipment, and quality of products. The higher the financial autonomy of the subsidiaries the bigger the positive changes in all fields of performance.

Suggested Citation

  • Urmas Varblane & Katrin M??nnik & Helena Hannula, 2005. "Autonomy and Performance of Foreign Subsidiaries in five Transition Countries," William Davidson Institute Working Papers Series wp780, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2005-780
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    References listed on IDEAS

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    More about this item

    Keywords

    international technology transfer; FDI effects on the host economy; subsidiary autonomy; subsidiary performance; transition countries;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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