An Enabling Mechanism for Subsidiary Autonomy

Abstract

Most studies discuss the mechanisms through which multinational enterprises (MNEs) empower their autonomy to their subsidiaries. However, how giving autonomy can promote one’s absorptive capability is less investigated. In addition, the linked relationship is important for subsidiaries, but it also has a spillover effect. Based on this idea, this study analyzes the market conditions and springboard intentions as the reasons for subsidiary autonomy. We use data from subsidiaries that are located in Taiwan to test our contention. Our findings indicated that market conditions have positive impacts on empowering autonomy, and autonomy would allow subsidiaries to improve their knowledge absorption capacities. This study also verified the mediating effect of autonomy and the moderating effect of vertical integration quality. In general, our findings contribute to international enterprise and subsidiary management theory and have practical referential value for spillover effects and investment strategies.