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The increasing role of subsidiary boards in MNCs: An empirical study

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  • Mark P. Kriger

Abstract

Little research has been done to date on the role of subsidiary boards (SBs) in MNCs. A two‐phase survey research design has yielded responses from 90 subsidiaries in 36 MNCs based in Europe, North America, and Japan. The sample provides evidence that: (1) SBs are perceived to be in transition from lesser to greater proactivity, and (2) MNCs with parent headquarters in North America, Europe, and Japan perceive the usefulness of these boards in different ways. The results indicate an increasingly active use of these boards in selective advisory and strategic roles. Some recommendations are presented for CEOs, chairmen, and subsidiary directors who are interested in designing their SBs to take better advantage of already legally mandated, but often underutilized, structures. SBs are not a panacea for resolving tensions between parents and subsidiaries and for monitoring changes in host country environments; however, they can provide added strategic governance for subsidiaries.

Suggested Citation

  • Mark P. Kriger, 1988. "The increasing role of subsidiary boards in MNCs: An empirical study," Strategic Management Journal, Wiley Blackwell, vol. 9(4), pages 347-360, July.
    • Handle: RePEc:bla:stratm:v:9:y:1988:i:4:p:347-360
    DOI: 10.1002/smj.4250090405
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    Cited by:

    1. Ruth V. Aguilera & Valentina Marano & Ilir Haxhi, 2019. "International corporate governance: A review and opportunities for future research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 457-498, June.
    2. Ilya R. P. Cuypers & Gokhan Ertug & Jeffrey J. Reuer & Ben Bensaou, 2017. "Board representation in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 38(4), pages 920-938, April.
    3. Hearn, Bruce, 2015. "Institutional influences on board composition of international joint venture firms listing on emerging stock exchanges: Evidence from Africa," Journal of World Business, Elsevier, vol. 50(1), pages 205-219.
    4. Dolgopyatova, Tatiana & Libman, Alexander & Yakovlev, Andrei, 2018. "Unintended Benefits of Empowering Boards in Conglomerates: A Case Study of AFK Sistema," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 23(2), pages 177-202.
    5. Marco Minciullo & Matteo Pedrini, 2020. "Antecedents of board involvement and its consequences on organisational effectiveness in non-profit organisations: a study on European corporate foundations," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(2), pages 531-555, June.
    6. Nan Zhou & Heli Wang, 2020. "Foreign subsidiary CSR as a buffer against parent firm reputation risk," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(8), pages 1256-1282, October.
    7. Mehdi Kazemi & Seyyed Babak Alavi, 2023. "Is context important for understanding board leadership? Exploring chairpersons’ leadership roles in board processes of subsidiary companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(3), pages 923-956, September.
    8. Muellner, Jakob & Klopf, Patricia & Nell, Phillip C., 2017. "Trojan Horses or Local Allies: Host-country National Managers in Developing Market Subsidiaries," Journal of International Management, Elsevier, vol. 23(3), pages 306-325.
    9. Jeffrey J. Reuer & Elko Klijn & Constantinos S. Lioukas, 2014. "Board involvement in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 35(11), pages 1626-1644, November.
    10. Kim, Bongjin & Prescott, John E. & Kim, Sung Min, 2005. "Differentiated governance of foreign subsidiaries in transnational corporations: an agency theory perspective," Journal of International Management, Elsevier, vol. 11(1), pages 43-66, March.
    11. Luo, Yadong, 2005. "How does globalization affect corporate governance and accountability? A perspective from MNEs," Journal of International Management, Elsevier, vol. 11(1), pages 19-41, March.
    12. Nan Zhou & Heli Wang, 0. "Foreign subsidiary CSR as a buffer against parent firm reputation risk," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-27.

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