This paper investigates how decision-making autonomy affects the possibility and intensity of innovation in subsidiaries of multinational enterprises (MNEs). Subsidiaries are increasingly identified as sources of innovation and as vehicles for cross-border transfer of new competences. The question of how much decision-making autonomy subsidiaries should have is a core issue in the management of headquarters-subsidiary relationships. Using two complementary theoretical perspectives, we hypothesize a non-linear relationship between subsidiary’s decision-making autonomy and innovation. We test our hypothesis in a multi-country and multiindustry database based on survey evidence of 134 subsidiaries located in five Central and Eastern European countries from 23 home countries. The empirical results provide support for a non-linear U shaped relationship between subsidiary decision-making autonomy and innovation intensity.
Academy of International Business. Annual Meeting. Proceedings, 2013
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Academy of International Business. Annual Meeting. Proceedings