Chapter 9: Control and Influence in the Embedded Multinational
In Chapter 8 the concept of business embeddedness at the subsidiary level was introduced and analysed. The following chapters are devoted specifically to ‘classical’ managerial issues in MNCs, namely the control exerted by corporate HQ over the subsidiaries, the role of the subsidiaries in the strategy process, and knowledge management. The model of the multinational firm outlined in the preceding chapters will be frequently referred to in the analysis, in which the network embeddedness of the subsidiaries is an important variable. In Chapter 9 we propose a model of the sources of influence to be found in MNCs and use it to analyse the conditions for the control exerted by corporate HQ. A distinction is drawn between HQ’s formal control and its actual influence. This model is tested with data from 98 subsidiaries in 20 MNC divisions. This book is built on the fundamental assumption that the various units in an MNC are embedded in business networks. In seeking to understand the way control and influence are shaped within the corporation and distributed among the different organizational actors, it is important that these networks should be taken into account. Each subsidiary operates within a particular network of business relationships that in turn constitutes a large proportion of the resources on which the individual subsidiary bases its position in the MNC. This conclusion applies regardless of whether we focus on relationships with external customers, suppliers, etc. or on similar relationships with other corporate units. Both types of relationship are part of...
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