Intermediate Units in Multinational Corporations: Advancing Theory on their Co‐parenting Role, Dynamics and Outcomes

Abstract

AbstractDue to the dispersion of headquarters’ activities across organizational and geographical boundaries, intermediate units (IUs) are emerging as a key actor in international business. These units are intermediate structural layers between headquarters (HQ) and local subsidiaries with specific HQ responsibilities. Through a systematic review of 68 studies published between 1996 and 2020, we develop a conceptual framework that integrates complementary streams of theoretical and empirical research with IUs as the focal unit of analysis. Our aims are to disentangle how the main theories in this field address the antecedents of IU creation, and explain the dynamism in the roles and functions of IUs and their outcomes. We also propose a conceptualization of IUs as co‐parents in a dynamic system in which parenting functions are shared by IUs and headquarters. Finally, we highlight avenues for future research, emphasizing opportunities to advance the understanding of IUs using different theoretical lenses that may help scholars position their work within the broader stream of literature.