Strategic Impact of Subsidiary Decision-making Power in Multinational Corporations

Wang Na, Wang Yonggui

Foreign Economics & Management Vol. 39, Issue 05, pp. 58 - 72 (2017)  DOI:10.16538/j.cnki.fem.2017.05.005

Abstract

Subsidiary decision-making power reflects the strategic initiative of the subsidiaries in multinational corporations（MNCs）, which has great impacts on MNCs’ effective exploitation of global resources. However, current academia pays little attention to specific strategic impact of subsidiary decision-making power on MNCs and does not verify it. Using multi-informant survey data from 111 subsidiaries in multinational enterprises, this paper makes an empirical study on how subsidiary decision-making power will influence subsidiary performance and parent innovation capability. The findings show that subsidiary decision-making power has a significantly positive effect on subsidiary performance and parent innovation capability. Global orientation in MNCs plays a significantly positive moderating role in the relationship between subsidiary decision-making power and parent innovation capability. However, the moderating effect of global orientation on the relationship between subsidiary decision-making power and subsidiary performance is not supported. It not only deepens the application of resource dependence theory in international business research, but also has great practice significance to the improvement of subsidiary management and whole competitiveness of multinational corporations.

Keywords

subsidiary decision-making power; subsidiary performance; parent innovation capability