The Role of Headquarters
New Horizons in International Business series
Edited by Ulf Andersson and Ulf Holm
Chapter 6: A Critical Assessment of the Business Network Perspective on HQ Control in Multinational Companies
Mohammad Yamin and Pervez N. Ghauri INTRODUCTION The business network (henceforth, network) approach has emerged as an influential perspective for studying managerial and organizational issues in relation to the multinational companies (MNCs). An increasing number of publications have cumulatively demonstrated that a network approach provides a rigorous framework for studying such questions as the strategic roles of subsidiaries, organizational power and knowledge transfer in the MNC (for example Forsgren and Johanson, 1992; Holm et al., 1995; Forsgren et al., 2005; Andersson et al., 2001, 2002 and 2007). In the contingency perspective (for example Ghoshal and Nohria, 1997) the organization of the MNC ultimately reflects top management’s perception of environmental imperatives, and the primary focus of the analysis is therefore on top management (‘strategic’) decision making. In sharp contrast, network studies look at the MNC from the perspective of middle or lower management (Forsgren and Johanson, 1992). The network of business relationships between a subunit and its important customers and/or suppliers is regarded as critical to the development of the subsidiary (Ghauri, 1992), to its ability to contribute to the rest of the MNC, to its relationship with the HQs and ultimately to the possibilities for overall performance of the MNC. Such networks are created, developed and evolve primarily through the work of lower and middle management in the organization. The network approach is thus concerned with providing a thorough treatment of the network-embedded operational life of the MN. However network studies do not ignore the MNC headquarters. On the contrary...
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