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The impact of corporate and national cultures on decentralization in multinational corporations

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  • Williams, Christopher
  • van Triest, Sander

Abstract

We develop and test a model of multinational corporation (MNC) decentralization in which the allocation of decision rights to subsidiaries is explained by aspects of both internal corporate culture as well as external national cultures. We extend the literature on MNC decentralization by testing the impact of both of these factors as determinants within the same model. Drawing on management control theory as a conceptual platform, we argue that the assignment of decision rights to a subsidiary in the MNC is impacted by corporate innovativeness and shared values, as well by aspects of home and host country cultures. We test our model on a sample of 119 MNC subsidiary managers drawn from a diverse range of industries and locations. The findings provide support to the proposition that corporate innovativeness positively impacts the decision to decentralize, whilst also indicating that home country individualism and host country uncertainty avoidance have a significant influence. The findings challenge established international management logic with respect to shared values--this variable is found to have a negative relationship with decentralization. Overall cultural distance is not found to be significant.

Suggested Citation

  • Williams, Christopher & van Triest, Sander, 2009. "The impact of corporate and national cultures on decentralization in multinational corporations," International Business Review, Elsevier, vol. 18(2), pages 156-167, April.
  • Handle: RePEc:eee:iburev:v:18:y:2009:i:2:p:156-167
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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. Ellen Haustein & Robert Luther & Peter Schuster, 2014. "Management control systems in innovation companies: a literature based framework," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(4), pages 343-382, February.
    3. Cansino, José M. & Lopez-Melendo, Jaime & Pablo-Romero, María del P. & Sánchez-Braza, Antonio, 2013. "An economic evaluation of public programs for internationalization: The case of the Diagnostic program in Spain," Evaluation and Program Planning, Elsevier, vol. 41(C), pages 38-46.
    4. Lewellyn, Krista B. & Bao, Shuji ‘Rosey’, 2014. "A cross-national investigation of IPO activity: The role of formal institutions and national culture," International Business Review, Elsevier, vol. 23(6), pages 1167-1178.
    5. Williams, Christopher & Lee, Soo Hee, 2016. "Knowledge flows in the emerging market MNC: The role of subsidiary HRM practices in Korean MNCs," International Business Review, Elsevier, vol. 25(1), pages 233-243.
    6. 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.
    7. Breunig, Karl Joachim & Kvålshaugen, Ragnhild & Hydle, Katja Maria, 2014. "Knowing your boundaries: Integration opportunities in international professional service firms," Journal of World Business, Elsevier, vol. 49(4), pages 502-511.
    8. Kawai, Norifumi & Strange, Roger, 2014. "Subsidiary autonomy and performance in Japanese multinationals in Europe," International Business Review, Elsevier, vol. 23(3), pages 504-515.

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