The Influence of Procedural Fairness on Subsidiary Autonomy: The Mediating Roles of Knowledge Dependence

Abstract

This paper examines the effects of procedural fairness and knowledge dependence on the autonomy of multinational corporation’s subsidiaries (subsidiary autonomy) in China. The originality of the paper lies in the identification and introduction of a new mediator, i.e., knowledge dependence, in the casual relationship between procedural fairness and subsidiary autonomy. Quantitative analysis shows that subsidiary autonomy is positively associated with procedural fairness. Knowledge dependence in terms of management expertise positively affects the level of subsidiary autonomy. Knowledge dependence in terms of technical know-how, however, is found to have insignificant effect on subsidiary autonomy. While it is found that high levels of perceived procedural fairness reinforces the dependence of management expertise in the parent-subsidiary dyadic, and which in turn increases the perceived level of subsidiary autonomy, the hypothesized mediating influence of the dependence of technical know-how in the dyadic relationship is, however, rejected.