The development and evolution of the HQ-Subsidiary relationship in an emerging market MNC : the case of UTi Worldwide Inc

Abstract

The study deals with the relatively unexplored area of the evolution of HQ-subsidiary relations in emerging market Multinational Corporations (MNCs). The study uses a framework proposed by Harzing, Sourge and Paauwe (2001) to study the evolution of four components of the relationship over a ten year period, namely: control mechanisms, expatriate assignments, level of interdependence and degree of local responsiveness. The paper also assesses the impact of two additional factors on the relationship, namely subsidiary evolution and the country-of-origin effect. The study analyses the case of a South African MNC, UTi Worldwide Inc. (“UTi”) a leader in the global network of freight forwarding and contract logistics and distribution services. Seven propositions are tested by means of the case study method to analyse the factors that contribute to the said evolution in the MNC. The study found that there was indeed an evolution in most aspects of the MNC’s HQsubsidiary relationship over that last ten years. In addition, the subsidiary themselves had evolved and the nature of the country-of-origin effect had significantly changed over the same period. This evolution process was influenced by a number of factors specific to and circumstances unique to the MNC.