Unravelling Agency Relations inside the MNC: The Roles of Socialization, Goal Conflicts and Second Principals in Headquarters-Subsidiary Relationships
Journal
Journal of World Business
ISSN
1090-9516
Type
journal article
Date Issued
2019
Abstract
In this paper, we propose and test an agency model for HQ-subsidiary relations. Drawing on classical agency assumptions, we develop a baseline hypothesis that links informal controls (i.e., socialization), HQ-subsidiary goal conflicts, and the HQ’s use of formal controls (i.e., behavioral controls). We subsequently introduce an important boundary condition, which reflects subsidiaries’ internal agency relations with subsidiary CEOs as second principals. More specifically, we argue that the baseline relationship only holds under low levels of second principal power. To test our model, we employed a unique study design with three parallel surveys addressing the
agents and the two principals involved in 131 agency relations within one MNC.
agents and the two principals involved in 131 agency relations within one MNC.
Language
English
Keywords
Headquarters-subsidiary relation
Agent relation
Agency theory
Socialization
Organizational control
Goal conflict
Multinational corporation
Principal-agent relation
HSG Classification
contribution to scientific community
HSG Profile Area
SoM - Responsible Corporate Competitiveness (RoCC)
Refereed
Yes
Publisher
Elsevier Science
Volume
54
Number
2
Start page
67
End page
81
Subject(s)
Eprints ID
255617