How does subsidiary autonomy influence performance? The moderating role of uncertainty

Abstract

Purpose The purpose of this paper is to explore the influence of subsidiary autonomy on subsidiary performance under uncertainty. Based on previous studies, the authors classify subsidiary autonomy into two categories, namely, strategic autonomy and operational autonomy, and investigate the relationships between these two categories of subsidiary autonomy and subsidiary performance under uncertainty. Design/methodology/approach The sample includes the subsidiaries listed on the Shanghai and Shenzhen Stock Exchanges in China from 2012 to 2015. Ordinary least squares are used to examine the hypotheses. Findings The results indicate that strategic autonomy is negatively related to subsidiary performance, whereas operational autonomy is positively associated with subsidiary performance. Moreover, uncertainty weakens the negative strategic autonomy-subsidiary performance linkage. Originality/value The findings of this study indicate that two categories of subsidiary autonomy (strategic autonomy, operational autonomy) have different effects on subsidiary performance. Moreover, uncertainty moderates the above relationships. This study explores the relationship between subsidiary autonomy and subsidiary performance and provides a useful guidance for the selection of subsidiaries’ management modes.