Autonomy and Performance of Foreign Subsidiaries in five Transition Countries

Abstract

The paper analyses the link between the autonomy according to business function and the performance of foreign subsidiaries in Slovenia, Poland, Hungary, Slovakia and Estonia. The novelty of the paper is in the deeper investigation of the multidimensionality of autonomy. Using the method of principal components, four business function factors relating to autonomy were obtained (technology, marketing, management, finance). The results supported the argument that the relationship between autonomy and performance depends on the type of autonomy. Marketing and finance are the most powerful dimensions of autonomy. Higher autonomy in marketing is negatively linked with technology upgrading, measured by productivity level, improvement of technological level of production equipment, and quality of products. The higher the financial autonomy of the subsidiaries the bigger the positive changes in all fields of performance.