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The Social Construction of Contextual Rationalities in MNCs: An Anglo-German Comparison of Subsidiary Choice

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  • Mike Geppert
  • Dirk Matten

Abstract

This paper seeks to examine empirically the extent to which actors in subsidiaries of multinational companies (MNCs) are able to exercise some choice in the face of global pressures from the MNC headquarters (HQ). We argue that managerial practices in MNCs are not the result of a simple imposition of a global or a MNC organizational rationality but are subject to an interactive process, where differing contextual rationalities come into play. Using data from MNC subsidiaries in Britain and Germany, the paper compares the power resources and strategic choices of subsidiary level actors and shows the ways in which they seek to influence global strategy implementation as it affects local work systems. We investigate the different abilities of German and British managers to shape global restructuring processes in their local organizational contexts and conclude that national contexts impact on both the formulation of parent company strategies via a home country rationality and on the implementation of global strategies via a host country rationality. There are greater national barriers to a MNC policy of convergence based on standardized products and processes in Germany than in the UK. Copyright Blackwell Publishers Ltd 2003.

Suggested Citation

  • Mike Geppert & Dirk Matten, 2003. "The Social Construction of Contextual Rationalities in MNCs: An Anglo-German Comparison of Subsidiary Choice," Journal of Management Studies, Wiley Blackwell, vol. 40(3), pages 617-641, May.
  • Handle: RePEc:bla:jomstd:v:40:y:2003:i:3:p:617-641
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    References listed on IDEAS

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    1. Anthony Ferner, 2000. "The Underpinnings of 'Bureaucratic' Control Systems: HRM in European Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 37(4), pages 521-540, June.
    2. Whittington, Richard & Mayer, Michael, 2000. "The European Corporation: Strategy, Structure, and Social Science," OUP Catalogue, Oxford University Press, number 9780199242085.
    3. Anthony Ferner & Matthias Varul, 2000. "'Vanguard' Subsidiaries and the Diffusion of New Practices: A Case Study of German Multinationals," British Journal of Industrial Relations, London School of Economics, vol. 38(1), pages 115-140, March.
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    Citations

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    Cited by:

    1. 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.
    2. Fortwengel, Johann & Jackson, Gregory, 2016. "Legitimizing the apprenticeship practice in a distant environment: Institutional entrepreneurship through inter-organizational networks," Journal of World Business, Elsevier, vol. 51(6), pages 895-909.
    3. Drogendijk, Rian & Holm, Ulf, 2012. "Cultural distance or cultural positions? Analysing the effect of culture on the HQ–subsidiary relationship," International Business Review, Elsevier, vol. 21(3), pages 383-396.
    4. Thomas Hutzschenreuter & Florian Gröne, 2009. "Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 269-307, March.
    5. Carlos Garcia-Pont & J. Ignacio Canales & Fabrizio Noboa, 2009. "Subsidiary Strategy: The Embeddedness Component," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 182-214, March.
    6. Bjørn T. Asheim & Bernd Ebersberger & Sverre J. Herstad, 2012. "MNCs between the Local and the Global: Knowledge Bases, Proximity and Distributed Knowledge Networks," Chapters,in: Innovation and Institutional Embeddedness of Multinational Companies, chapter 4 Edward Elgar Publishing.
    7. repec:spr:manint:v:51:y:2011:i:5:d:10.1007_s11575-011-0091-2 is not listed on IDEAS
    8. repec:spr:manint:v:57:y:2017:i:3:d:10.1007_s11575-016-0298-3 is not listed on IDEAS
    9. Stephanie C. Schleimer & Torben Pedersen, 2013. "The Driving Forces of Subsidiary Absorptive Capacity," Journal of Management Studies, Wiley Blackwell, vol. 50(4), pages 646-672, June.
    10. Martin Heidenreich, 2012. "Introduction: The Debate on Corporate Embeddedness," Chapters,in: Innovation and Institutional Embeddedness of Multinational Companies, chapter 1 Edward Elgar Publishing.
    11. Jos Gamble, 2010. "Transferring Organizational Practices and the Dynamics of Hybridization: Japanese Retail Multinationals in China," Journal of Management Studies, Wiley Blackwell, vol. 47(4), pages 705-732, June.
    12. repec:spr:manint:v:57:y:2017:i:6:d:10.1007_s11575-017-0327-x is not listed on IDEAS
    13. Matten, Dirk & Geppert, Mike, 2004. "Work systems in heavy engineering: the role of national culture and national institutions in multinational corporations," Journal of International Management, Elsevier, vol. 10(2), pages 177-198.
    14. Flora F. T. Chiang & Thomas A. Birtch, 2010. "Appraising Performance across Borders: An Empirical Examination of the Purposes and Practices of Performance Appraisal in a Multi-Country Context," Journal of Management Studies, Wiley Blackwell, vol. 47(7), pages 1365-1393, November.
    15. Poulis, Konstantinos & Poulis, Efthimios & Plakoyiannaki, Emmanuella, 2013. "The role of context in case study selection: An international business perspective," International Business Review, Elsevier, vol. 22(1), pages 304-314.

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