Network Knowledge in International Business

Network Knowledge in International Business

New Horizons in International Business series

Edited by Sarianna M. Lundan

This book focuses on current cutting-edge research concerning the increasing strategic importance of subsidiary networks to the multinational firm. It combines contributions from three major related areas of inquiry: the changing theoretical conception of networks and the structure of the multinational firm, the importance of spillovers and agglomeration economies related to multinational investments, and the management of the flow of information and knowledge from headquarters to subsidiaries and vice versa.

Chapter 8: Subsidiary decision-making autonomy: competences, integration and local responsiveness

Vitor Corado Simões, Rita Biscaya and Pedro Nevado

Subjects: business and management, international business


Chapter 8 21/6/02 11:27 AM Page 1 8. Subsidiary decision-making autonomy: competences, integration and local responsiveness Vitor Corado Simões, Rita Biscaya and Pedro Nevado INTRODUCTION The new, more heterarchical or horizontal understanding of MNE management and subsidiary behaviour lends an increasing relevance to the topic of subsidiary autonomy. This is envisaged not just in the context of headquarters-subsidiaries unidirectional and hierarchical relationships, but especially from a subsidiary development standpoint. Our aim in this chapter is to continue and extend the work of Taggart and Hood (1999) on the main determinants of subsidiary autonomy. A slightly different perspective of the determinants of autonomy will be provided, however. The rationale is that the level of autonomy is a consequence of the interplay among three main groups of factors: subsidiary competences; corporate embeddedness; and local embeddedness. The chapter, and particularly the empirical analysis, will follow this three-legged approach. We think that our findings have relevant implications for both subsidiary management and host country inward investment policy. The empirical evidence discussed here is based on a survey of 119 foreignowned manufacturing subsidiaries in Portugal. Portugal is an interesting location, having in mind both her success in attracting inward investment in the 10 years after entering the EC (Simões, 1992; McDermott, 1997), but also the dominant ‘implementer’ characteristics of such investments (Simões, 1992; Amin and Tomaney, 1998). The chapter is developed in six parts, excluding the present introduction. The first provides the theoretical background, focussing particularly on subsidiary roles, embeddedness and...

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