Abstract  

Background: The notion of subsidiary autonomy has lately received significant attention in the literature research. The autonomy for subsidiaries has been viewed to increase the operational effectiveness and local market response. However, the literature has highlighted a complex interplay between the control from parent company and the autonomous decisions for subsidiaries. Hence, the understanding of the extent subsidiaries possess autonomy in multinational corporations remains unexplained.    

Purpose: This thesis examines to what extent the subsidiaries are granted autonomy within multination corporations, specifically focusing on capital allocation and decision-making. The aim of the thesis is to further clarify and explore the relationship between parent companies and their subsidiaries investigating the financial autonomy and control from parent company.  

Method: The thesis employs a qualitative methodology using semi-structured interviews to gather data from key employees from both parent company and subsidiaries within two different multinational corporations. The study adopts an abductive strategy, which allows for an investigation of both theory and the collected data.   

Conclusion: This research discovered that the degree of financial autonomy granted to subsidiaries may differ greatly based on their strategic significance and alignment with the overall corporate strategy. Further, the findings claimed that factors such as the subsidiary role and organization structure influence the degree of financial autonomy for subsidiaries. These results highlight the challenges in balancing autonomy for local market needs with the overall strategic objectives. Moreover, the findings contribute to an in-depth understanding of why it is crucial for parent companies to carefully control the degree of autonomy they grant, ensuring that subsidiaries align with overall corporate strategy.