COUNTRY, INDUSTRY AND FIRM SIZE EFFECTS ON FOREIGN SUBSIDIARY STRATEGY.AN EXAMPLE OF FIVE CEE COUNTRIES

Katrin Männik, Helena Hannula and Urmas Varblane

No 27, University of Tartu - Faculty of Economics and Business Administration Working Paper Series from Faculty of Economics and Business Administration, University of Tartu (Estonia)

Abstract: The aim of the paper is to analyse the contribution of FDI to knowledge and technology transfer into five CEE economies (Estonia, Hungary, Poland, Slovakia, Slovenia) by examining the influences of country, industry, firm-size and foreign ownership on the choice of the subsidiaries’ strategies. Only the autonomy of subsidiaries across business functions is focused in the current analysis. Proceeding from the results of the analysis one can see many differences in the autonomy of subsidiary. Subsidiaries from the more developed CEE countries Slovenia and Hungary had the highest scores for the autonomy, especially in terms of management and financial autonomy.Analyses supported also hypothesis that minority foreign owned subsidiaries are more autonomous than majority owned, even taken into account all other variables. More productive manufacturing industries have more autonomous subsidiaries only in the case of more developed countries (Slovenia and Hungary). Only in Poland, Hungary and Estonia there exist more autonomous subsidiaries among large firms. In Slovenia and Slovakia the smaller firms have higher autonomy. Generally no some common pattern of subsidiary mandates could be presented in all five CEE. The role of subsidiary is above all industry and firm size specific. Drawing parallels between the received results about the autonomy scores for business functions and three subsidiary roles, `World/Regional Mandate` strategy is most pronounced in Hungary and less extent in Slovenia, `Specialised Contributor` in Slovenia, Estonia and Slovakia, and `Local Implementer` in Poland.

Pages: 63 pages
Date: 2004
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (7)

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