Does Country Context Distance Determine Subsidiary Decision-Making Autonomy?: Theory and Evidence from European Transition Economies

Gjalt de Jong, Dut Van Vo, Philipp Marek, Björn Jindra

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    We studied an underrepresented area in the international business (IB) literature: the effect of country context distance on the distribution of decision-making autonomy across headquarters and foreign affiliates. Foreign affiliates directly contribute to the competitive advantages of multinational enterprises, highlighting the importance of such intra-firm collaboration. The division of decision-making autonomy is a core issue in the management of headquarters–subsidiary relationships. The main contribution of our paper is that we confront two valid theoretical frameworks – business network theory and agency theory – that offer contradictory hypotheses with respect to the division of decision-making autonomy. Our study is among the first to examine this dilemma with a unique dataset from five Central and Eastern European transition countries. The empirical results provide convincing support for our approach to the study of subsidiary decision-making autonomy
    We studied an underrepresented area in the international business (IB) literature: the effect of country context distance on the distribution of decision-making autonomy across headquarters and foreign affiliates. Foreign affiliates directly contribute to the competitive advantages of multinational enterprises, highlighting the importance of such intra-firm collaboration. The division of decision-making autonomy is a core issue in the management of headquarters–subsidiary relationships. The main contribution of our paper is that we confront two valid theoretical frameworks – business network theory and agency theory – that offer contradictory hypotheses with respect to the division of decision-making autonomy. Our study is among the first to examine this dilemma with a unique dataset from five Central and Eastern European transition countries. The empirical results provide convincing support for our approach to the study of subsidiary decision-making autonomy
    LanguageEnglish
    JournalInternational Business Review
    Volume24
    Issue number5
    Pages874–889
    ISSN0969-5931
    DOIs
    StatePublished - 2015

    Cite this

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    Does Country Context Distance Determine Subsidiary Decision-Making Autonomy? Theory and Evidence from European Transition Economies . / de Jong, Gjalt; Van Vo, Dut; Marek, Philipp; Jindra, Björn .

    In: International Business Review, Vol. 24, No. 5, 2015, p. 874–889.

    Research output: Contribution to journalJournal articleResearchpeer-review

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