What can struggling businesses learn from Lamborghini?


What’s the best way for a parent company to save a struggling business? Experts suggest that businesses should reject a one-size-fits-all approach and consider a more fluid strategy used by Audi AG to save the super-car manufacturer, Lamborghini.

When Audi (a subsidiary of the Volkswagen Group) rescued the ailing Lamborghini business in 1998, it followed the old parent company playbook by insisting that many Audi processes were followed, including those in manufacturing, procurement and quality control. However, by the 2007 launch of the Lamborghini Aventador, this picture had changed and even reversed.

Using research data spanning 21 years Surrey Business School found that Audi had given the smaller unit more autonomy and let it innovate, offering a potential model for how other companies can successfully balance efficiency-driven controls with innovation. By varying the freedoms enjoyed by the companies they buy, parent organisations can unlock the hidden potential in the companies they acquire – sometimes allowing them higher levels of organisational autonomy, and sometimes reining them in. The experience of Lamborghini suggests that fluctuating levels of autonomy can lead to the ‘Holy Grail’ of efficiency and innovation.

The research was conducted through interviews with 50 Lamborghini and Audi executives, observations at facilities, and analysis of company documents, including presentations, sales figures, organisational charts, annual reports, press releases, social media content, media coverage and more. Conducted over nearly a decade, but examining 21 years of company history, the period covered the creation of new models like the Urus and Huracán.

By investigating what factors led to shifting levels of organisational autonomy at Lamborghini and the way managers in both parts of the business bargained for power, the researchers created a new process model for the dynamics that determined the levels of freedom offered to a subsidiary by its parent. The model contributes fresh ideas to conversations about organisational autonomy and is applicable to both merger and acquisition contexts and broader business settings involving subsidiaries.

The research offers businesses ideas for creating and maintaining competitive advantage and customer value when working with subsidiaries. By understanding how internal bargaining processes work, it’s possible to use them to drive success. Parent companies should no longer assume the eventual aim after a merger or acquisition is either full amalgamation or separation. There’s a middle road offering a dynamic way forward and one where we could all follow a trail blazed by Lamborghini.

To access the full paper, read “The Dynamics of Organizational Autonomy: Oscillations at Automobili Lamborghini”, Administrative Science Quarterly, DOI https://doi.org/10.1177/00018392221091850