Impact of Global Companies’ Real Options Implementation on Their Hungarian Subsidiaries

Abstract

This paper analyzes the crisis-driven organizational reconfiguration actions in global companies, the timing of investments/divestments and their impact on Hungarian subsidiaries. Exploratory research is applied, based on interviews with 13 manufacturing subsidiaries in Hungary. It is found that, on balance, the surveyed Hungarian subsidiaries have benefited from their owners’ cost-cutting and restructuring actions. Global companies increased their local commitment: they performed tangible and intangible investments in capacity expansion and product upgrading at subsidiaries and delegated additional tasks and responsibilities to subsidiary level. Prior commitment was often regarded as an important explanatory factor of subsequent investments during and after the crisis. However, global companies’ quests for flexibility and their systematic organizational experimentation have sometimes resulted in subsidiaries’ loss of previously gained mandates.