Does country context distance determine subsidiary decision-making autonomy? Theory and evidence from European transition economies

Gjalt de Jong, Vo van Dut, Bjoern Jindra () and Philipp Marek ()

International Business Review, 2015, vol. 24, issue 5, 874-889

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.

Keywords: Central and Eastern European transition economies; Country context distance; Decision-making autonomy; Headquarters–subsidiary relationship (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:24:y:2015:i:5:p:874-889

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DOI: 10.1016/j.ibusrev.2015.04.003

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