Does Country Context Distance Determine Subsidiary Decision-making Autonomy? Theory and Evidence from European Transition Economies
Gjalt de Jong, Vo. van Dut, Björn Jindra, Philipp Marek
International Business Review,
No. 5,
2015
Abstract
We studied an underrepresented area in the international business (IB) literature: the effect of country context distance on the distribution of decision-making autonomy across headquarters and foreign affiliates. Foreign affiliates directly contribute to the competitive advantages of multinational enterprises, highlighting the importance of such intra-firm collaboration. The division of decision-making autonomy is a core issue in the management of headquarters–subsidiary relationships. The main contribution of our paper is that we confront two valid theoretical frameworks – business network theory and agency theory – that offer contradictory hypotheses with respect to the division of decision-making autonomy. Our study is among the first to examine this dilemma with a unique dataset from five Central and Eastern European transition countries. The empirical results provide convincing support for our approach to the study of subsidiary decision-making autonomy.
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Does Country Context Distance Determine Subsidiary Decision-making Autonomy? Theory and Evidence from European Transition Economies
Gjalt de Jong, Vo. van Dut, Björn Jindra, Philipp Marek
International Business Review,
2015
Abstract
We studied an underrepresented area in the international business (IB) literature: the effect of country context distance on the distribution of decision-making autonomy across headquarters and foreign affiliates. Foreign affiliates directly contribute to the competitive advantages of multinational enterprises, highlighting the importance of such intra-firm collaboration. The division of decision-making autonomy is a core issue in the management of headquarters–subsidiary relationships. The main contribution of our paper is that we confront two valid theoretical frameworks – business network theory and agency theory – that offer contradictory hypotheses with respect to the division of decision-making autonomy. Our study is among the first to examine this dilemma with a unique dataset from five Central and Eastern European transition countries. The empirical results provide convincing support for our approach to the study of subsidiary decision-making autonomy.
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The Impact of Psychic Distance on Subsidiary Autonomy - Theory and Evidence from Central and Eastern European Countries
Gjalt de Jong, D. van Vo, Philipp Marek
Journal of International Management,
2012
Abstract
The key objective of this study is to determine whether or not psychic distance between home and host countries influences the decision-making autonomy of subsidiaries. Theoretical arguments for the relationship between psychic distance and subsidiary autonomy go in both directions with some predicting a negative relationship and others predicting a positive one. We test these conflicting hypotheses with a unique multi-country and multi-industry database reporting survey evidence of 809 subsidiaries located in five Central and Eastern European countries that serve headquarters in 44 different nation states. Psychic distance is a multidimensional construct and measured in terms of linguistic, religious, economic, institutional and geographic distance. The empirical results of 103 country pairs suggest that psychic distance – in terms of religious and economic distance – is positively related to autonomy.
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