Autonomy and MNE Support for Initiatives: Roles of Embeddedness and Organizational Structures

Abstract

In this study we examine the relationship between subsidiary autonomy and the initiative resource support a subsidiary requests and receives from the MNE. Drawing on resource dependence, social exchange and organizational theoretical perspectives, we propose some underlying mechanisms as external embeddedness, reverse knowledge transfers, and MNE organizational structures to explain the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration. We draw on survey data from 429 foreign-owned subsidiaries in New Zealand and employ structural equation modelling. Results show that the direct relationship between subsidiary autonomy and the receipt of MNE resource support for initiatives is negative and this is more likely the case where the subsidiary is managed under simple structures (i.e. subsidiary reports to corporate headquarters, regional headquarters, or mandated units) rather than complex structures (i.e. matrix or network). Furthermore, an increase in subsidiary autonomy positively influences MNE initiative resource-seeking and this is more likely the case where the subsidiary is less embedded externally. Subsidiary initiative resource-seeking from the MNE is positively associated with the subsidiary initiative resource-receipt from the MNE, and this is more likely the case where the subsidiary is engaged in reverse knowledge transfers. This study contributes by extending the research on subsidiary autonomy, dual embeddedness, organizational structures, and subsidiary initiatives. It contributes by showing how dual embeddedness, and the complexity of organizational structures determine the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration.