Institutional development and subsidiary decision making autonomy: theory and evidence from Taiwan

Abstract

This article investigates the effects of differing institutional contexts in which multinationals operate and their impact on decision making autonomy of subsidiaries located in an emerging economy. The research builds on a unique dataset of all known foreign-owned subsidiaries in Taiwan. Our results indicate that differences in formal institutional development and informal institutions are positively associated with overall decision making autonomy in foreign-owned subsidiaries. Factor markets and infrastructure, on the other hand seem to play a lesser role.