The paper develops a conceptual model on relationship between the strategic development of subsidiaries, in developed economies, and the development of higher valued operations that leads to increased employment of skilled labour. A concept of effective autonomy is developed in the paper. Effective autonomy is conceived as the ability of the subsidiary to implement and finance its desired increase in skilled labour. The interrelated effects between effective autonomy and intra and inter organisational relationships and employment of skilled labour are found to be uncertain because effective autonomy can be supportive of the development of intra and inter organisational relationships that requires a higher proportion of skilled labour, but effective autonomy can lead to deterioration in intra-organisational relationships thereby leading to a more peripheral role played by the subsidiary thus lowering the need for skilled employment. The conceptual model is based on changes in effective autonomy and intra and inter organisational relationships and is therefore set in the context of the evolution of the development of subsidiaries
