How Does a Foreign Subsidiary Operating in an Emerging Market such as South Africa Balance Headquarter Control and Subsidiary Initiative-taking?

Sammanfattning

The purpose of the research was to increase understanding of how foreign subsidiaries operatingin an emerging market balance headquarter control and subsidiary initiatives in institutionallycomplex environments. Specifically, this thesis explored how the relationship between SwedishMNE headquarters and their South African subsidiaries affects the subsidiaries’ ability to takeinitiatives, particularly focusing on local adaptation, operational disruptions and controldynamics. This was done through a qualitative case study using semistructured interviews withheadquarter representatives in Sweden and subsidiary representatives in South Africa. Thefindings suggest that local knowledge and the ability to adapt to the institutional environment arecritical factors for achieving long-term success in the South African market. A successfulbalance between headquarter control and subsidiary initiative in emerging markets is achievednot through fixed levels of autonomy, but rather the ability to respond effectively to localcontexts while remaining strategically aligned with headquarter interests. By focusing on the HQ- subsidiary relationship in an institutionally complex environment, the thesis contributes tointernational business literature by providing insight on the tradeoff between autonomy andcontrol, challenging the traditionally static view on emerging market subsidiaries as passive,suggesting that the tradeoff invites a rather active role.