Global diversification's effect on multinational subsidiaries' autonomy

Sushil Vachani

International Business Review, 1999, vol. 8, issue 5-6, 535-560

Abstract: This paper responds to the need for understanding how increasing global diversification in recent years has affected the management of multinationals. It builds upon Egelhoff's [Egelhoff; Egelhoff and Egelhoff] information-processing theory to develop a theoretical framework that traces the linkage between the nature of a multinational's global diversification and its control system. It empirically tests how the four components of the recently-developed Total Global Diversification measure, related and unrelated international geographic diversification, and related and unrelated product diversification, affect subsidiary autonomy, which remains a critical aspect of multinational control. The findings suggest that the components of Total Global Diversification have a significant effect on subsidiary autonomy and that their effect depends on the multinational's organization structure. The research also establishes that subsidiary autonomy is greater for marketing and personnel decisions than for R&D and finance. The research findings suggest that researchers would derive more explanatory power from using finer measures of global diversification in studies of diversified multinationals, and managers need to be take into account the nature and extent of the multinational's global diversification when deciding how much autonomy to give subsidiaries.

Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969593199000190
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:8:y:1999:i:5-6:p:535-560

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic
http://www.elsevier. ... me/133/bibliographic

Access Statistics for this article

International Business Review is currently edited by P. Ghauri

More articles in International Business Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().