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A Question of Legitimacy? A Dynamic Perspective on Multinational Firm Control

Author

Listed:
  • Barbara Brenner

    (WU Vienna University of Economics and Business, A-1090 Vienna, Austria)

  • Björn Ambos

    (University of St. Gallen, CH-9000 St. Gallen, Switzerland)

Abstract

The control and coordination of a network of geographically and culturally dispersed subsidiaries is one of the most prominent challenges in international management. However, many empirical findings on the effectiveness of various control mechanisms and combinations thereof are still counterintuitive. This study uses longitudinal case studies and cross-sectional interview data to extend control theory by examining why, how, and in what sequence large multinational firms (MNCs) implement controls in their networks of foreign subsidiaries. Our analysis draws from literature on institutional theory, embeddedness, and organizational power to demonstrate that MNC headquarters need to overcome institutional duality when implementing their controls abroad. We find that headquarters do so by using social controls, primarily as a way of legitimizing and institutionalizing their process and output controls that are implemented subsequently.

Suggested Citation

  • Barbara Brenner & Björn Ambos, 2013. "A Question of Legitimacy? A Dynamic Perspective on Multinational Firm Control," Organization Science, INFORMS, vol. 24(3), pages 773-795, June.
    • Handle: RePEc:inm:ororsc:v:24:y:2013:i:3:p:773-795
    DOI: 10.1287/orsc.1120.0760
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    References listed on IDEAS

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