MNCs’ Intermediate Units and Their Choice of Control Mechanisms

Àngels Dasí, Torben Pedersen () and José Pla-Barber
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Àngels Dasí: University of Valencia
Torben Pedersen: Copenhagen Business School
José Pla-Barber: University of Valencia

Management International Review, 2024, vol. 64, issue 1, No 4, 59-88

Abstract: Abstract This paper analyzes how MNCs’ intermediate units—those that exercise authority over other subsidiaries—apply specific control mechanisms: centralization, formalization, outcome control, and socialization. We combine agency and network theory to explain how intermediate units’ dual agency role—as both principal and agent— and their network embeddedness form the choice of control mechanisms. More specifically, we propose hypotheses on how the intermediate units’ internal and external relationships determine their choice of control mechanism. We study this issue in the context of Spanish intermediate units —owned by European MNCs— that exercise authority over subsidiaries in Latin America.

Keywords: Intermediate unit; Multilayered MNC; Control mechanism; Agency theory; Network theory (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11575-023-00527-z

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