Research background: Digitization, technological advancements, such as AI, the global customer base and varying ownership structures can be seen as a few of the largest challenges that contemporary international MNEs face with regards to their internal operations. Such disruptive factors require firms to be innovative in their products, services, and operations, to retain a competitive advantage and thrive in the international markets – at the foundation of which lies having an entrepreneurial orientation (EO). This is applicable not only to HQs, but also to subsidiaries, which possess the local knowledge needed to succeed in that market. From this, the whole MNE can and should benefit, enabled through effective diffusion of initiatives – realizable through central roll-out from the HQ. 

Research purpose: This study explores how HQs behave when faced with initiatives from their foreign subsidiaries. The main goal of this study is to identify behavioural patterns and how this influences the ultimate decision-making of the HQ. This study aims to join the discussion on HQ-subsidiary relationships with regards to initiative realization. The growing interest in research on the role of HQs in contemporary MNEs, the lack of research on central initiative realization, and the centralization of knowledge at HQ are fundamental to this study. 

Research question: What internal organizational factors influence HQs’ decisions on the central realization of their foreign subsidiaries’ initiatives? 

Research method: This thesis is based on the research paradigm of relativistic ontology and social constructionist epistemology, meaning reality is shaped by people and their observations. I adopted an explorative, holistic, single-case study design of a Dutch MNE with subsidiaries in Germany and Sweden. I used the approach of heterogeneous purposive sampling, denoting various inclusion criteria beforehand. In total, I conducted seventeen interviews. The collected data was consequently analyzed using the principles of the template approach. 

Conclusion: The findings are consolidated in a conceptual model (see Figure 2) that denotes knowledge sharing and autonomy as the direct internal influences on the HQ’s decision to centrally realize foreign subsidiaries’ initiatives. These effects are moderated by managerial and HQ intentionality, the pursuit of a common strategy, trust as a dual relationship, the perceptions of alignment of organizational culture and the subsidiary’s motivation to engage in initiatives.