Walking a Tightrope Balancing Between Home and Local: Antecedents And Consequences of Foreign Subsidiary Autonomy

Abstract

This study examines dual factors driving subsidiary autonomy and the subsequent impact on performance. We define autonomy as a role that can put its decisive plan into development without the interference of headquarters (HQ) and take charge of its strategic performance. We advance the idea that the more the HQ global orientation is inclined toward local responsiveness than global integration and the more local stakeholder demand influences the foreign subsidiary, the more subsidiary autonomy increases. An autonomous foreign subsidiary with the capability to find local specific resources and combine them with HQ resources will result in greater strategic performance as the strategic mix turns out to be a unique competitive advantage. In order to figure out the detailed context which strengthens the positive relationship between subsidiary autonomy and subsidiary performance, two antecedents were also employed as moderators. HQ global orientation which is more prone to local responsiveness than global integration turned out to enhance the positive link of subsidiary autonomy and subsidiary performance. Furthermore, subsidiary autonomy was revealed to partially mediate the relationship between local stakeholder influence and subsidiary performance. General supports were found in the model based on 177 Korean subsidiaries located in 19 host countries worldwide.