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Country, Industry And Firm Size Effects On Foreign Subsidiary Strategy.An Example Of Five Cee Countries

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  • Katrin Männik
  • Helena Hannula
  • Urmas Varblane

Abstract

The aim of the paper is to analyse the contribution of FDI to knowledge and technology transfer into five CEE economies (Estonia, Hungary, Poland, Slovakia, Slovenia) by examining the influences of country, industry, firm-size and foreign ownership on the choice of the subsidiaries’ strategies. Only the autonomy of subsidiaries across business functions is focused in the current analysis. Proceeding from the results of the analysis one can see many differences in the autonomy of subsidiary. Subsidiaries from the more developed CEE countries Slovenia and Hungary had the highest scores for the autonomy, especially in terms of management and financial autonomy.Analyses supported also hypothesis that minority foreign owned subsidiaries are more autonomous than majority owned, even taken into account all other variables. More productive manufacturing industries have more autonomous subsidiaries only in the case of more developed countries (Slovenia and Hungary). Only in Poland, Hungary and Estonia there exist more autonomous subsidiaries among large firms. In Slovenia and Slovakia the smaller firms have higher autonomy. Generally no some common pattern of subsidiary mandates could be presented in all five CEE. The role of subsidiary is above all industry and firm size specific. Drawing parallels between the received results about the autonomy scores for business functions and three subsidiary roles, `World/Regional Mandate` strategy is most pronounced in Hungary and less extent in Slovenia, `Specialised Contributor` in Slovenia, Estonia and Slovakia, and `Local Implementer` in Poland.

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  • Katrin Männik & Helena Hannula & Urmas Varblane, 2004. "Country, Industry And Firm Size Effects On Foreign Subsidiary Strategy.An Example Of Five Cee Countries," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 27, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    • Handle: RePEc:mtk:febawb:27
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    1. Urmas Varblane & Katrin Männik & Helena Hannula, 2005. "Autonomy And Performance Of Foreign Subsidiaries In Transition Countries," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 38, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    2. Klára Katona, 2018. "Impact of Knowledge Capital on the Production of Hungarian Firms," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(2), pages 135-146, May.
    3. Poór, József, 2013. "Az emberierőforrás-gazdálkodás átalakulása a nemzetközi cégek leányvállalatainál Magyarországon és a kelet-európai régióban [Changes of HR function at local subsidiaries of foreign-owned firms in H," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 64-89.
    4. 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.
    5. Ari Kokko & Victoria Kravtsova, 2008. "Innovative capability in MNC subsidiaries: evidence from four European transition economies," Post-Communist Economies, Taylor & Francis Journals, vol. 20(1), pages 57-75.
    6. Julia Koralun-Bereźnicka, 2014. "Industry and Size Effects in Corporate Performance: An Empirical Research on Selected EU Countries," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 2(2), pages 34-42.

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