When in Rome, do as the Romans do: Subsidiary Autonomy as a Response to Corruption Distance after Entry

    Research output: Chapter in Book/Report/Conference proceedingConference abstract in proceedingsResearchpeer-review


    Research on the HQ-subsidiary relationship that has studied subsidiary autonomy in relation to the local context has mainly seen the local context as a source of opportunities. However, the concept of liability of foreignness reminds us that the local context also imposes constraints to foreign entrants, which translate into more or less tacit costs of doing business abroad. We focus on corruption as a local context constraint that reflects the more tacit and implicit form of liability of foreignness, and study the influence of corruption distance between home and host country on subsidiary autonomy. Drawing on institutional theory, we argue that majority-owned foreign subsidiaries experience greater autonomy for high levels of corruption distance as a result of a pressure for local conformity. However, the ultimate organizational response of the MNE to corruption distance critically depends on internal forces based on socialization and resource-dependence, which exert different pressures for internal consistency. A tension between internal and external pressures materializes for high levels of socialization and subsidiary autonomy will be reduced in presence of high corruption distance. Instead, internal and external pressures reinforce one another and subsidiary autonomy will be enhanced when the subsidiary controls critical resources and corruption distance is high.
    Original languageEnglish
    Title of host publicationProceedings of the 56th Annual Meeting of the Academy of International Business : Local Contexts in Global Business
    EditorsKlaus Meyer, Tunga Kiyak
    Place of PublicationEast Lansing, MI
    PublisherAcademy of International Business
    Publication date2014
    Publication statusPublished - 2014
    EventAIB 2014 Annual Meeting : Local Context in Global Business - Westin Bayshore, Vancouver, Canada
    Duration: 23 Jun 201426 Jun 2014
    Conference number: 56


    ConferenceAIB 2014 Annual Meeting
    LocationWestin Bayshore
    Internet address
    SeriesAcademy of International Business. Annual Meeting. Proceedings

    Cite this