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MNC headquarters' role in subsidiaries' value-creating activities: A problem of rationality or radical uncertainty

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  • Forsgren, Mats
  • Holm, Ulf

Abstract

Summary We examine the role of headquarters (HQ) in the value-creating processes of sub-units in the multinational corporation, and claim that this role is dependent on how the knowledge situation of HQ is conceptualized. Two perspectives on the role of HQ are considered: "rationality" and "radical uncertainty". We find that there are clear differences between the two perspectives concerning the possibility of HQ to shape future innovation projects, monitor these projects and contribute with own expertise. In general the first perspective is rather optimistic about these possibilities, while the second perspective tells us that HQ involvement in the value-creating processes often becomes dysfunctional. The paper ends by indicating how the theoretical conflict between the two perspectives can be addressed by empirical research.

Suggested Citation

  • Forsgren, Mats & Holm, Ulf, 2010. "MNC headquarters' role in subsidiaries' value-creating activities: A problem of rationality or radical uncertainty," Scandinavian Journal of Management, Elsevier, vol. 26(4), pages 421-430, December.
    • Handle: RePEc:eee:scaman:v:26:y:2010:i:4:p:421-430
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    Citations

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    Cited by:

    1. Utz Schäffer & Matthias D. Mahlendorf & Jochen Rehring, 2014. "Does the Interactive Use of Headquarter Performance Measurement Systems in Foreign Subsidiaries Endanger the Potential to Profit from Local Relationships?," Australian Accounting Review, CPA Australia, vol. 24(1), pages 21-38, March.
    2. Lopez-Vega, Henry & Tell, Fredrik, 2021. "Technology strategy and MNE subsidiary upgrading in emerging markets," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    3. Manuel Hensmans & Guangyan Liu, 2018. "How Do the Normativity of Headquarters and the Knowledge Autonomy of Subsidiaries Co-Evolve? Capability-Upgrading Processes of Chinese Subsidiaries in Belgium," Management International Review, Springer, vol. 58(1), pages 85-119, February.
    4. William G. Egelhoff, 2020. "How a Flexible Matrix Structure Could Create Ambidexterity at the Macro Level of Large, Complex Organizations Like MNCs," Management International Review, Springer, vol. 60(3), pages 459-484, June.
    5. Christine Holmström Lind & Olivia H. Kang, 2017. "The Value-Adding Role of the Corporate Headquarters in Innovation Transfer Processes: The Issue of Headquarters Knowledge Situation," Management International Review, Springer, vol. 57(4), pages 571-602, August.
    6. Manuel Hensmans & Guangyan Liu, 2016. "How do the normativity of headquarters and the knowledge autonomy of subsidiaries co-evolve?," Working Papers TIMES² 2016-020, ULB -- Universite Libre de Bruxelles.
    7. Yuzhe Miao & Yuping Zeng & Jeoung Yul Lee, 2016. "Headquarters Resource Allocation for Inter-Subsidiary Innovation Transfer: The Effect of Within-Country and Cross-Country Cultural Differences," Management International Review, Springer, vol. 56(5), pages 665-698, October.
    8. Aissa Mosbah & Jaithen Alharbi & Abdulla Fetais & Ibrahim Alkandi, 2019. "The Role of the Manager in the Middle East: An Empirical Study of Multinational Companies," Global Business Review, International Management Institute, vol. 20(4), pages 887-900, August.
    9. Dellestrand, Henrik & Holm, Ulf & Lindahl, Olof, 2023. "Moving beyond the transfer dyad: Exploring network influences on transfer effectiveness," International Business Review, Elsevier, vol. 32(2).

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