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How subsidiaries gain power in multinational corporations

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  • Mudambi, Ram
  • Pedersen, Torben
  • Andersson, Ulf

Abstract

This study focuses on how power is gained within large organizations, such as the intra-organizational network of MNCs. Drawing on resource dependence literature, this study develops and empirically tests a set of hypotheses aimed at explaining the multifaceted nature of power and decision making in multinational firms. Data collected from 2107 foreign-owned subsidiaries in seven European countries is used to test the hypotheses. The results indicate that mutual dependence and dependence imbalance provide strong explanations for subsidiary power. Furthermore, subsidiary power over strategic decisions in the MNC is gained through functional power, notably the possession of technological, rather than business-related, power or by the possession of both as they reinforce each other in strengthening the subsidiary's strategic power in the MNC network.

Suggested Citation

  • Mudambi, Ram & Pedersen, Torben & Andersson, Ulf, 2014. "How subsidiaries gain power in multinational corporations," Journal of World Business, Elsevier, vol. 49(1), pages 101-113.
    • Handle: RePEc:eee:worbus:v:49:y:2014:i:1:p:101-113
    DOI: 10.1016/j.jwb.2013.02.001
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