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“HiA we own & for you”: How can HQ create value with intervention?

16/11/2021

In an attempt to facilitate swift growth in highly dynamic environments and to promote local initiatives, headquarters of multinational companies often delegate decision rights to subsidiaries. However, as HQ recognizes the potential for achieving cross-border economies of scale and scope, it might need to overrule decisions that subsidiaries had made earlier on the basis of their decision rights.

Despite the aim to increase its performance, such acts of intervention might have negative consequences for the MNC network. In particular, when subsidiary managers perceive interventions as undue “meddling”, they might become demotivated to implement HQ decisions and initiatives, which ultimately leads to diminishing returns. As interventions happen frequently in MNCs, it is of great importance for companies to understand how HQ creates but also destroys value when intervening in subsidiary matters.

This question is at the heart of the research project “HiA we own & for you” that helps Austrian companies uncover opportunities for value creation of corporate HQ, and generate new impulses for improvement.   

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References:

Asmussen, C. G., Foss, N. J., & Nell, P. C. (2019). The role of procedural justice for global strategy and subsidiary initiatives. Global Strategy Journal, 9(4), 527-554.

Foss, K., Foss, N., Nell, P. C. (2012). MNC Organizational Form and Subsidiary Motivation Problems: Controlling Intervention Hazards in the Network MNC. Journal of International Management, 18(3), 247-259.

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