Definition of subsidiary

The word "subsidiary" originates from the Latin subsidium, which means a sum of money provided by one person or state to help another. The use of the term in its modern business sense can be traced back to the 18th century, when merchants in the British Empire established subsidiary companies to carry out specific trading operations in different parts of the world. These subsidiaries were typically fully owned by the parent company and operated under its guidance and control, but were also granted a certain degree of autonomy to manage their local operations. As markets and businesses became increasingly complex and globalized, the use of subsidiaries as a strategic business tool grew in popularity, allowing multinational corporations to expand their operations while maintaining centralized control over their global operations. Today, a subsidiary is defined as a company that is partially or fully owned by another company, known as the parent company, and operates under its governance and strategic direction.