Abstract
Purpose
Today’s MNCs need to adopt smart ways of organizing to tap into the potential of their complex internal and external relationships. This requires MNCs to identify the relevant ...relationships and to develop appropriate relational skills and capabilities. Hence this chapter addresses two key questions: what kind of relational structures and qualities are conducive to value creation, and how can MNCs best develop and utilize their complex relationships?
Methodology/approach
The chapter reviews the main developments in the area of MNC organizing to date. Subsequently three examples of novel on-going research into MNC relationships are presented. Finally avenues for future research and links to related areas in international business research are discussed.
Findings
The relational perspective on the MNC is well-established. Past research, however, has mostly taken the view of the headquarters-subsidiary dyad without fully conceptualizing the multiplicity of relationships and interdependencies of individuals, groups, and units in the MNC. This chapter uncovers the relational skills required to improve MNC value creation abilities by influencing and leveraging connections among disparate units and individuals to tap their expertise and creative potential. This includes insights into abilities for managing and balancing multiple networks, abilities for mobilizing relevant network actors when driving bottom-up processes, and abilities for facilitating connections and collaboration among different actors.
Originality/value
This chapter advances the understanding and practice of multinational organizing. It presents novel ways to systematically address the complexities and interdependencies of relational effects on the ability of MNCs to create value.
The phenomenon of subsidiary initiative has received increasing attention in recent years, but the consequences of initiatives and the associated dynamics of headquarters–subsidiary relationships ...have received much less research attention. Building on resource dependence theory and self-determination theory we argue that two basic goals subsidiary managers pursue are to achieve autonomy vis-à-vis corporate headquarters, and influence over other units. We investigate how a subsidiary's past initiatives contribute to its bargaining power, and how headquarters’ response – through granting attention or monitoring – affects the realization of the subsidiary's goals. Using structural equation modeling, our hypotheses are tested by drawing on a sample of 257 subsidiaries located in three different countries (Australia, Canada and the United Kingdom). Our results show that subsidiaries are not able to increase their influence through initiatives unless they get headquarters’ attention. We also find that subsidiary initiatives have a direct effect on subsidiary autonomy, but the caveat is that initiatives also evoke headquarters monitoring, which in turn decreases the subsidiary's autonomy. In addition to providing insights into how subsidiaries can achieve their goals, the paper also sheds light on the critical role headquarters plays in leveraging initiatives, and the influence of individual subsidiaries in the multinational enterprise.
The emergence of perception gaps between headquarters and subsidiaries has an important bearing on research practice as well as on managerial issues. This study is among the first to systematically ...investigate the link between the MNC unit's strategic environment and perception gaps. Evidence was found that certain strategic environments bear a higher risk for perception gaps concerning information flows between headquarters and subsidiaries and the subsidiaries' autonomy. Our results also confirm that tense perception gaps have a negative effect on managers' satisfaction and, thus, pose a threat to the company's operations. Collectively, our findings have an impact on research practice as well as on managerial issues.
Cross-border integration is the central management issue for banks that expand internationally, and this is especially true in Central and Eastern Europe, where the pace of internationalisation ...through mergers and acquisitions has been rapid. A critical challenge in cross-border integration is aligning a multinational company's formal organizational structure with the distribution of capabilities across its subsidiary units, and this issue is explored by tracking the co-evolution of organizational structure and capabilities during the internationalisation of a large banking network into this region. Our focus is the Vienna head office of Bank Austria Creditanstalt, which was acquired first by HypoVereinsbank (Germany) and then UniCredit (Italy). Despite its formal role being downgraded during these changes, the unit continued to develop its distinctive capabilities. The key insight our article offers is that managing cross-border integration is not simply about recognizing the value of the distinctive capabilities of individual units and designing formal structures that successfully align with them. It is also about understanding the need for dynamic interaction between formal corporate structure and individual units' desires to retain power and influence, which have significant implications for the development of their organizational capabilities.
Reverse knowledge transfers are beneficial to MNCs, but just how much so depends on the subsidiaries’ strategic mission, its country’s economic development and the ability of headquarters to absorb ...incoming information. Within MNCs, the traditional role of headquarters as prime source of knowledge and competencies is changing. Increasingly, headquarters act as receivers of knowledge from their internationally dispersed subsidiaries. The efficiency of the MNC as a knowledge-integrating institution is being influenced by changes in both its subsidiaries’ context and its capabilities to process knowledge.
In the area of knowledge management and knowledge governance, previous research has mostly focused on either knowledge stocks or knowledge flows of firms or organizational units. Contrary to this ...work, our study is among the first to integrate these two perspectives in order to shed light on the complementarity effects of different types of knowledge stocks and flows in the multinational corporation (MNC). We investigate intra-functional as well as cross-functional complementarity effects from the perspective of the knowledge recipient. We test the impact of stocks on flows on the benefit that is created for MNC units. Based on a comprehensive sample of 324 relationships between MNC units we find that both types of complementarity create benefits for these units, but that the effects from intra-functional combinations of knowledge stocks and flows are significantly stronger than from cross-functional combinations.
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