Subsidiary influence of multinational enterprise headquaters scope requirements

Abstract

In today’s competitive business environment, subsidiaries play an essential role in a multinational enterprise’s (MNE’s) strategy. MNE’s establish and gain competitive advantage by leveraging subsidiaries’ firm-specific advantage, local embeddedness and global integration. Given the MNE’s global strategy, subsidiaries are assigned specific mandates and scope requirements. However, these scope requirements hamper subsidiaries to identidy and exploit business opportunities. Thus, the extent to which subsidiary managers are allowed to make strategic decisions based on their operational environment, without interference from MNE headquarters, directly influences the subsidiary's performance. The purpose of the research is to analyse the behaviour of the subsidiary managers by understanding their motivation, personal characteristics and actions to influence headquarters decisions regarding proposed scope changes. A qualitative, exploratory research approach was used to gain deeper understanding and insights from subsidiary managers experiences in applying upward influence on headquarters. Data was collected through twelve indepth, semi-structured interviews with subsidiary managers within various subsidiaries. The research outcome is a proposed subsidiary-headquarters influence model that provides a framework subsidiary managers can use to understand the process and nuances to influencing headquarters.