Upgrading and Subsidiary Autonomy : Experience of Hungarian Manufacturing Companies

This paper examines the patterns of subsidiary autonomy at the organizational periphery: at multinational companies’ (MNCs) manufacturing subsidiaries in Hungary. It investigates the impact of upgrading on subsidiary autonomy. Our case study-based investigation (27 in-depth interviews at 14 manufacturing subsidiaries) integrates three previously isolated lines of research: 1) subsidiary upgrading, 2) subsidiary autonomy and 3) headquarters’ role in MNCs. We find no direct relation between upgrading and subsidiary autonomy, since external factors such as changes in the business environment and/or in parent companies’ strategic decisions often counteract upgrading-induced effects. It is shown that the subsidiaries’ moving up the value chain is paralleled by similar upward shifts in parent companies’ activity specialization. The reconfiguration of parent companies’ activities, together with the expansion of the size and scope of the multinational company will necessarily have an impact on the headquarters’ coordination and governance practices: over time they tend to become more formal. [