Foreign ownership was and remains an important feature of Canada’s economy. It also is a source of controversy. Yet the consensus is that foreign direct investment brings with it more benefits than problems.
Document Highlights
This paper explores the issue of the decision-making autonomy of foreign-owned subsidiaries (FOS) in Canada and searches for the main determinants of such autonomy. Knowing what factors don’t determine decision-making autonomy is as important as knowing which factors do.
For example:
- It might be expected that a FOS that does better than it did in the past would be rewarded with more autonomy. Survey results do not support this contention. What matters is how you compare with the rest of the parent organization. You don’t have to be doing well. You just need to be doing better than other parts of the parent firm.
Other factors also include:
-
- an innovative FOS;
- strategically important programs;
and
- the ability to arrange your own financing for research programs.
If you want more decision-making autonomy, these are the two keys: a performance that is better than the rest and top-quality innovation.
