As a matter of fact, they matter a lot.

Take the examples of two subsidiaries of Shell: Canada and South Africa.  

In a recent book chapter with Rick Molz, we show how autonomy, decentralization and credibility of the subsidiaries played a key role in their respective abilities to generate valuable strategies.

In the early 1990s, the Canadian subsidiary was among the first organizations worldwide, to define and refine environmental reporting standards, which were adopted not only by other Shell subsidiaries, but also by the industry. This is not small feat.  Environmental reporting is an opportunity for companies to showcase their achievements in the area of sustainability.  Shell's role in defining standards practices for reporting is recognized as a major contribution.

On the other hand, the South African subsidiary was less invested with autonomy and decentralization, thus unprepared to deal with new trends in the local environment that affected its legitimacy.  When hit by a crisis, local managers, although prepared and knowledgeable, were not autonomous enough to act and generate coherent and locally-sensitive strategy. As a result, problems escalated, and the social and environmental crisis that ensued had significant effects on the company globally.

Clearly, there is a lesson here about the need to engage with all areas of the organization, to generate valuable strategies, and not discount knowledge from less central units.

To learn more, read our chapter.