Utilizing the broader agency perspective for studying headquarters–subsidiary relations in multinational companies

Anne Kristin Hoenen and Tatiana Kostova
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Anne Kristin Hoenen: Institute for International Business, WU Vienna University of Economics and Business, Vienna, Austria
Tatiana Kostova: Sonoco International Business Department, Moore School of Business, University of South Carolina, Columbia, USA

Journal of International Business Studies, 2015, vol. 46, issue 1, 104-113

Abstract: The nature of global business today increases the complexity of multinational companies and highlights the challenges of managing headquarters–subsidiary (HQ–Sub) relationships. We identify key unresolved issues in HQ–Sub relations including closing the gap between headquarters’ expectations and subsidiary performance, managing the nested hierarchical relationships across multiple organizational layers, and aligning these relationships across diverse subunits embedded in different social contexts. We propose that agency theory, particularly its more recent progressions, can advance our understanding of these issues and we offer a perspective to guide such research. We discuss several research implications of the static bilateral, static multilateral, dynamic, and social and contextual streams of agency theory.

Date: 2015
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