Heterogeneity of the steering of foreign subsidiaries in multinational automotive companies

Abstract

Rising environmental complexity is leading to challenges in the steering of foreign subsidiaries in multinational companies (MNCs). The actual local embeddedness literature recommends that global standardisation and the most homogeneous steering of foreign subsidiaries possible should be subordinated to the efforts of the important subsidiaries to adopt a more local orientation and to achieve more heterogeneity in steering. This paper seeks to clarify the present extent of the heterogeneity of steering in MNCs. A literature review is carried out to find reasons for the demand for more heterogeneous steering and to identify decision principles that help in making efficient decisions. Hypotheses are made as to how far these decision principles bring about heterogeneous steering. They serve as a basis for the empirical examination of multinational German automotive companies. Contrary to expectations, the heterogeneity of steering in MNCs is still relatively low, but a clear influence of the different decision principles on the heterogeneity of the steering was found.