Product Innovation and Decision-making Autonomy in Subsidiaries of Multinational Companies

Sjoerd Beugelsdijk, Björn Jindra

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

This paper investigates the relationship between subsidiary decision-making autonomy and their development of product innovations. Using survey data from 563 subsidiaries located in six European countries, we show how the degree of decision-making autonomy, as well as the functional area in which the subsidiary has decision-making autonomy, affect the probability of a subsidiary developing product innovations. We find that higher decision-making autonomy increases the probability of a subsidiary developing a product innovation. This effect is particularly pronounced, but not restricted to, decision-making in the area of R&D or the adoption of technologies. The positive effect extends also to functional areas such as investment, finance, supplier selection as well as marketing and sales. In addition, our study suggests that higher degrees of novelty of product innovation still benefit from subsidiaries’ autonomy, but may require higher degrees of managerial involvement by headquarters.
Original languageEnglish
JournalJournal of World Business
Volume53
Issue number4
Pages (from-to)529-539
Number of pages11
ISSN1090-9516
DOIs
Publication statusPublished - Jun 2018

Keywords

  • Subsidiary product innovation
  • Multinational enterprises
  • Subsidiary decision-making autonomy
  • External embeddedness

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