Subsidiary redefinition: Charter loss in a German-owned subsidiary in Hungary

Christoph Dörrenbächer and Jens Gammelgaard

Discussion Papers, Research Unit: Internationalization and Organization from WZB Berlin Social Science Center

Abstract: Based on a literature review and a single case study approach, this paper provides insights into the actors, interests and dynamics of charter losses. It reports the results of interviews with 20 managers at different units of Siemens ICN (Information & Communication Network division) in Germany, Hungary and Austria, including the Hungarian subsidiary where the charter loss occurred, the German headquarters, and the main competing subsidiaries. Furthermore, the paper sheds light on the questions: to what extent and by what combination of host country, subsidiary-related and MNC structural and organizational factors do situations develop in which a subsidiary loses its charter. Our findings show that there is no single reason for a charter loss, but multiple interdependent reasons subject to divergent interpretations, reflecting the micropolitical interests of the key actors. The case study further elucidates that there is room for strategic action at the subsidiary level to avert a charter loss, whereby anticipatory adjustment of the subsidiary towards more balanced internal and external embeddedness as well as constant interpersonal networking with the headquarters office are two important prerequisites.

Date: 2006
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