Subsidiary managers’ initiative pursuit: A behavioral agency model

Subsidiary managers’ decisions to pursue initiatives for innovative product introductions in their host markets provide opportunities for rent creation, but also bear risks for the multinational corpo-ration (MNC). However, we lack insights into which factors drive such decisions. Grounded in be-havioral agency theory, our study investigates which factors at the individual level, the corporate level, and the subsidiary’s implementation context increase subsidiary managers’ likelihood of initi-ative pursuit. We propose that an individual manager’s capability and the MNC’s entrepreneurial orientation serve as reference points in a specific implementation context. Based on a stated-choice experiment with 799 respondents, results show that subsidiary managers’ likelihood to pursue an innovation initiative varies depending on the context, and the choice of implementation mode acti-vates subsidiary managers’ gain frames. Our findings advance theory by providing granularity on the situational complexity across multiple methodological levels that instigate subsidiary managers’ initiative pursuit.