The Agency Perspective for Studying Headquarters-Subsidiary Relations: An Assessment

Despite the increasing use of the agency perspective in studies of headquarters-subsidiaries relations in the multinational corporation (MNC), opponents fundamentally question its utility. In an attempt to contribute to this debate, we evaluate prior studies and develop considerations for future research. Our review of extant studies of headquarters-subsidiaries relations that make (explicit) use of the agency perspective reveals two significant shortcomings. First, we identify a need to validate the underlying assumptions when using the agency perspective in studies of headquarters-subsidiaries relations. Second, we detect a need to better account for the multi-layered nature of headquarters-subsidiary relations in the MNC. A focus on these two areas can improve the use of the agency perspective and, ultimately, help resolve the contentious debate over the utility of the agency perspective.