Location of Decision-Rights within Multinational Firms

Posted: 28 Nov 2013

See all articles by Leslie A. Robinson

Leslie A. Robinson

Dartmouth College - Tuck School of Business; Dartmouth College - Accounting

Phillip C. Stocken

Dartmouth College - Tuck School of Business

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Date Written: November 26, 2013

Abstract

Using U.S.-based multinational firm data gathered over more than two decades, we examine factors associated with the location of decision-rights within these firms, whether the inappropriate assignment of decision-rights is associated with poor firm performance, and whether these firms relocate decision-rights in response to their evolving environments. We find that a mismatch between the location of decision-rights and a firm’s environment is associated with weak firm performance. We also show that the likelihood a parent company will alter the assignment of decision-rights to a subsidiary is increasing in the extent of a mismatch although this likelihood is decreasing in the strength of the subsidiary’s performance.

Keywords: organizational structure, multinational, delegation, decentralization, decision-rights

Suggested Citation

Robinson, Leslie and Stocken, Phillip C., Location of Decision-Rights within Multinational Firms (November 26, 2013). Journal of Accounting Research, Vol. 51, No. 5, 2013. Available at SSRN: https://ssrn.com/abstract=2360164

Leslie Robinson (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Dartmouth College - Accounting ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-4018 (Phone)

Phillip C. Stocken

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States
603-646-2843 (Phone)

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