MNC Headquarters Research Articles

Like parent, like child: MNCs’ CSR and their foreign subsidiaries’ environmental footprint

This study examines how MNCs’ foreign subsidiaries respond to internal demands from the parent and external demands from the host and home institutions to determine their environmental footprint. Using a sample of subsidiaries of U.S. MNCs operating in China, we find that subsidiary environmental footprint is negatively related to parent environmental performance. We also find that the impact of parent environmental performance on subsidiary environmental footprint is weakened by the levels of legal system development, collectivism, and political system development in regions where MNC subsidiaries operate and is heightened by the strength of social capital and stringency of environmental regulations in regions where MNC headquarters are located. Our findings have implications for executives of MNCs and policymakers.

Cultural Distance Effects on MNC Performance: A Macro and Meso Approach

In this study we examined the effect of triad cultural distance (national, organizational and professional) between MNC headquarters (HQs) and subsidiaries on employees' work attitudes and objective organizational performance indicators. To so do, we collected data from over 1,500 employees from 58 subsidiaries of 8 MNCs, located in 18 countries. Multilevel analyses supported the hypothesized curvilinear relationship between cultural distance and work attitudes (job satisfaction and commitment) and objective performance outcomes (absenteeism and profits). Specifically, we found that lower levels of cultural distance between HQ and subsidiaries' national, organizational, and professional culture yielded better results in terms of work attitudes and organizational performance indicators, compared to no distance at all, but higher levels of distance dramatically reduced the outcomes. We discuss the theoretical and practical contribution of these curvilinear relationships.

Too Much of Two Good Things: Explicating the Limited Complementarity Between Drivers of MNC Headquarters’ Absorptive Capacity

Too Much of Two Good Things: Explicating the Limited Complementarity Between Drivers of MNC Headquarters’ Absorptive Capacity

Role of context in knowledge flows: Host country versus headquarters as sources of MNC subsidiary knowledge inheritance

AbstractResearch SummaryWe respond to calls in the strategy and international business literature for elucidating how multinational subsidiaries develop contextual intelligence in host countries and how they use the local context as a source of valuable opportunities for learning. Applying the theoretical lens of subsidiary absorptive capacity and building on a gravity model, we propose an approach that can distinguish and compare the influences of the host country context and headquarters over the subsidiary knowledge production. Some subsidiaries may become global second headquarters and innovation hubs, as evidenced qualitatively in the paper with the case of Cisco. Essentially, subsidiaries, characterized by higher stocks of knowledge and greater number of locally hired employees are likely to absorb relatively more knowledge from the local host country context.Managerial SummaryManagers at multinational companies have to carefully balance acquiring knowledge from the headquarters, vis‐a‐vis acquiring knowledge from the local context of countries where the firm has subsidiaries. In contrast to a “headquarter‐centric” approach where most of the knowledge management activities are centered around the MNC headquarters, we argue that larger subsidiaries, often characterized by a large presence of local R&D workers, might disproportionately draw knowledge from the local context, rather than from the headquarters. In addition to developing theoretical propositions along these lines, we provide an illustrative example of how Cisco opened a “second headquarters” in India, to learn from the rich local context.

Does proactivity matter? the importance of initiative selling tactics for headquarters acceptance of subsidiary initiatives

Abstract By integrating literature on proactive behavior, in particular voice behavior theory, with the attention-based view of the firm, we examine how the use of a set of initiative selling tactics influences the acceptance of subsidiary initiatives by MNC headquarters. The findings suggest that the initiative selling tactics that matter most for the headquarters acceptance of subsidiary initiatives are related to proactive efforts such as the preparation and the packaging of the subsidiary initiative. The paper contributes to academia and practice by providing a richer understanding of proactive behavior among subsidiaries in terms of the “voice tactics” used to get their subsidiary initiatives recognized and accepted by headquarters. The study uses data from a questionnaire survey of 110 MNC subsidiaries and qualitative interview data.

Value Creation at the Subsidiary Level: Testing the MNC Headquarters Parenting Advantage Logic

The purpose of this study is to test the assumptions of the headquarters parenting advantage in multinational firms within the context of subsidiary innovation processes. Specifically, we explore the relationship between the selective involvement of headquarters in both innovation development and transfer processes and their related performance in a data set of 85 innovation projects analysed with structural equation modelling. The findings provide only limited support to the parenting advantage logic as they show that although the headquarters are able to select subsidiary-level strategic innovation processes, their involvement is hampering the performance of these processes. Consequently, we offer new extensions to the reasoning behind the parenting advantage logic by introducing four complementary theoretical explanations for the potentially harmful effects of headquarters' involvement in subsidiary innovation-related activities.

Trust and boundary spanners in cross-border management

Boundary spanners play a critical yet unspecified role in managing multinational corporations and their foreign subunits. One of the boundary spanning functions is to build cross-border trust relationships, at both interpersonal and interorganizational levels. Previous research has primarily focused on dyadic exchange relationships either between MNC headquarters and their subunits or between suppliers and buyers. Inter-unit trust relationships and boundary spanning activities in international joint ventures (IJVs) are under-researched. We develop a micro-macro process model of trust building and boundary spanning, and propose a set of propositions for future research.

Towards explaining subsidiary implementation, integration, and internalization of MNC headquarters HRM practices

We conceptualize the transfer of organizational practices from headquarters to subsidiaries of multinational corporations as encompassing three dimensions: implementation, integration and internalization. To shed light on the distinct natures of the different dimensions of transfer we examine how different organizational factors relate to each of the dimensions. We test our hypotheses on a sample of 105 subsidiaries from 11 Nordic corporations. Our results confirm the distinct nature of the dimensions of transfer, showing that formal control, inter-unit social capital, and subsidiary capabilities differ in how they are associated with subsidiary implementation, integration and internalization of HRM practices from headquarters.

MNC Headquarters as Global Network Orchestrators: Insights from Headquarters Relocation Patterns in Europe

MNC Headquarters as Global Network Orchestrators: Insights from Headquarters Relocation Patterns in Europe

Roles Played by the MNC Headquarters in Reverse Diffusion of Human Resource Management Practices

What is the role of the MNC headquarters in the process of reverse diffusion of human resource management (HRM) practices from foreign subsidiaries to other parts of the MNC? A fast growing body of...

MNC Headquarters as Global Network Orchestrators: Insights from Headquarters Relocation Patterns in Europe

MNC Headquarters as Global Network Orchestrators: Insights from Headquarters Relocation Patterns in Europe

A Question of Legitimacy? A Dynamic Perspective on Multinational Firm Control

The control and coordination of a network of geographically and culturally dispersed subsidiaries is one of the most prominent challenges in international management. However, many empirical findings on the effectiveness of various control mechanisms and combinations thereof are still counterintuitive. This study uses longitudinal case studies and cross-sectional interview data to extend control theory by examining why, how, and in what sequence large multinational firms (MNCs) implement controls in their networks of foreign subsidiaries. Our analysis draws from literature on institutional theory, embeddedness, and organizational power to demonstrate that MNC headquarters need to overcome institutional duality when implementing their controls abroad. We find that headquarters do so by using social controls, primarily as a way of legitimizing and institutionalizing their process and output controls that are implemented subsequently.

Parenting advantage in the MNC: An embeddedness perspective on the value added by headquarters

What determines the value anMNC's headquarters adds to its own affiliates? In this paper, we shed light on this question by linking the embeddedness view of the multinational corporation to the literature on parenting advantage. We test our hypotheses on an original dataset of 124 manufacturing subsidiaries located in Europe. Our results indicate that the external embeddedness of theMNCis an antecedent to headquarters' value creation. We find that headquarters' investments into their own relationships with the subsidiaries' contexts are positively related to the value added by headquarters. Furthermore, this relationship is stronger when the subsidiary itself is strongly embedded. We discuss implications for theMNCliterature, embeddedness research, and the literature on parenting and headquarters' roles. Copyright © 2013 John Wiley & Sons, Ltd.

MNC Headquarters as Activity Systems: The Consequences of Differentiating and Relocating MNC Headquarters

MNC Headquarters as Activity Systems: The Consequences of Differentiating and Relocating MNC Headquarters

The Size and Composition of Corporate Headquarters in Multinational Companies: Empirical Evidence

Abstract Based on a six country survey of nearly 250 multinationals (MNCs), this paper is the first empirical analysis to describe the size and composition of MNC headquarters and to account for differences among them. Findings are that: MNC corporate headquarters are more involved in “obligatory” and value creating and control functions than in operational activities; there are no systematic differences in the determinants of the size and composition of corporate headquarters between MNCs and purely domestic companies; as the geographic scope of an MNC increases two offsetting phenomena occur — headquarters decrease their influence over operational units which ceteris paribus reduces the size of headquarters, but the relative size of obligatory functions at headquarters increases with increased country heterogeneity. The net effect is that the size of corporate headquarters expands as MNC geographic scope increases. The notion of “administrative heritage” is validated as MNCs from different countries have substantially different corporate headquarters — US headquarters are large (255 median staff for a 20,000 FTE MNC) and European headquarters smaller (124). Implications are drawn that countries will lose activities if domestic firms are acquired by foreign MNCs, and that MNCs need to allow more subsidiary autonomy as their geographic scope increases.

Role of MNC Headquarters in Value Creation

Prior investigations conceptualized corporate headquarters as an important orchestrator of innovation (transfer) processes between subsidiaries, but our consulting experiences show that headquarters‘ intervention can potentially hinder innovation (development) within subsidiaries. Drawing from existing literature on the innovation paradox and the capability theory, this paper directly examines the impact of innovation-integration dilemma on value creation in MNCs, and overcomes this impediment by coining a new term innovativeness scalability that would enable innovation development and transfer to occur automatically and simultaneously within and across subsidiaries. Based on our findings and past experiences, our results indicate that engaging in indirect intervention is an important strategy for corporate headquarters wishing to resolve the innovation-integration dilemma and create value for their organizations.

How do regional headquarters influence corporate decisions in networked MNCs?

In networked MNCs where knowledge and power are distributed, corporate strategy processes benefit from input arising from many different levels of the organization. Recently, the regional (i.e., supra-national) level has been emphasized as an important additional source of knowledge and input, and as a bridge between local subsidiaries and global corporate headquarters. This paper builds theory on the antecedents to regional headquarters' influence on corporate decisions (i.e., organizational, behavioral, and motivational). Based on a survey of regional headquarters in Europe and their relations with MNC headquarters, we provide empirical evidence that a regional headquarters' autonomy and signaling behavior have significant effects on its influence on corporate strategy. Furthermore, we find support for our hypothesis that the regional headquarters' charter moderates such bottom-up influence.

Strategic Management Knowledge Transfer, Absorptive Capacity and the Attainment of Strategic Objective of MNCs’ Chinese Subsidiaries

Different types of knowledge such as R&D, marketing, and manufacturing knowledge have been focused in the past researches, while few scholars paid attention to strategic management knowledge. This paper focuses on the attainment of strategic objective of MNCs’ Chinese subsidiaries, by analyzing the strategic management knowledge transfer from MNC headquarters to the Chinese subsidiaries. The influence of organizational culture, trust and absorptive capacity on the attainment of strategic objective was examined. 115 Chinese subsidiaries were surveyed in the empirical research, showing different results under the Chinese market background. This paper offers a new perspective for the further researches of knowledge transfer and the strategic management practices.

The geographic scope of the MNC and its alliance portfolio: Resolving the paradox of distance

AbstractSome research suggests that knowledge transfer and performance suffer when entities are distant from each other, while other work emphasizes that distance is beneficial by allowing firms to access novel and diverse knowledge. We resolve this paradox by focusing on the differing roles of MNC subsidiaries and headquarters vis‐à‐vis its alliances: distance between technology alliance partners and subsidiaries hurts MNC performance, but MNCs benefit when such partners are located afar from headquarters. We find support for these ideas in a longitudinal sample (2002 to 2006) of 126 Fortune 500 firms. Our work broadens the concept of the geographic scope of the firm, and suggests that MNCs gain by searching globally but collaborating locally.

A Research on the Mechanism of Strategic Management Knowledge Transfer From MNC Headquarters to Chinese Subsidiaries

A Research on the Mechanism of Strategic Management Knowledge Transfer From MNC Headquarters to Chinese Subsidiaries