Managing the Embedded Multinational

Managing the Embedded Multinational

A Business Network View

Mats Forsgren, Ulf Holm and Jan Johanson

This book expands the business network view on managerial issues in multinational corporations. Specifically, it scrutinises the importance of a subsidiary’s external and internal business network for its strategic and organizational role within the corporation.

Chapter 10: Subsidiary Power in the Embedded Multinational

Mats Forsgren, Ulf Holm and Jan Johanson

Subjects: business and management, international business


Chapter 9 focused on the conditions for exerting control from the point of view of corporate HQ. In the present chapter we turn to the subsidiary’s ability to exert influence ‘from below’. Our argument is based on the same sources-of-power model described at the beginning of Chapter 9. A distinction is drawn between the subsidiary’s influence on strategic decision-making and its own functional importance, thus reflecting two types of sub-unit power in MNCs. Determinants of these two types of power are discussed below and tested against the same data as that used in Chapter 9. In the previous chapter we maintained that HQ’s formal control and its actual influence over its subsidiaries’ behavior are a matter not only of authority but also of control over other critical resources on which the subsidiaries are dependent. We also argued that the actual influence is reciprocal in that a subsidiary is not only affected by HQ, but in its turn also affects the behavior of HQ and other corporate units. This means that a subsidiary can exert influence over strategic investments above and beyond its own local undertakings, and may sometimes find itself in confrontation with the intentions of corporate HQ. In the following pages we discuss two types of subsidiary power that can be found in MNCs. The first and more traditional type of power is conceptualized here as net dependencies between parties, that is to say between a focal subsidiary and other units in the MNC. Net dependencies are defined, in...

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