MNC Organizational Form and Subsidiary Motivation Problems: Controlling Intervention Hazards in the Network MNC
40 Pages Posted: 7 Dec 2011
Date Written: December 6, 2011
The MNC literature treats the (parent) HQ as entirely benevolent with respect to their perceived and actual intentions when they intervene at lower levels of the MNC. However, HQ may intervene in subsidiaries in ways that demotivate subsidiary employees and managers (and therefore harm value-creation). This may happen even if such intervention is benevolent in its intentions. We argue that the movement away from more traditional hierarchical forms of the MNC and towards network MNCs placed in more dynamic environments gives rise to more occasions for potentially harmful intervention by HQ. Network MNCs should therefore be particularly careful to anticipate and take precautions against “intervention hazards”. Following earlier research, we point to the role of normative integration and procedural justice, but argue that they also serve to control harmful HQ intervention (and not just subsidiary opportunism).
Keywords: The network MNC, headquarters, managerial opportunism, psychological contracts, procedural justice
JEL Classification: D23, F23, L14, M14
Suggested Citation: Suggested Citation