Research summary: Challenges related to the complexity of overlapping multiple partner headquarters configurations, the resulting power and political tensions between headquarters, and the consequent effects of multiple interventions in subsidiary value-creating activities remain an understudied phenomenon. We present a rich case study of how complex overlapping headquarters configurations develop. Then, we present the processes underlying power and political tensions that lead to parenting disadvantages between partner headquarters. We find that multiple and simultaneous headquarters interventions place the subsidiary between a rock and a hard place, as it becomes subject to conflicting headquarters voices. We contribute to the literature on parenting in multinational enterprises through an increased understanding of overlapping headquarters configurations and the power and political tensions between headquarters configurations that stimulate interventions in subsidiary R&D mandates.

Managerial summary: Multinational enterprises are exposed to a plethora of complex challenges. To meet these challenges, the organizational structure often becomes complex. We focus on the causes and consequences of complex headquarters structures, that is, operating with multiple partner headquarters, within multinational enterprises in relation to the allocation and reallocation of subsidiary R&D mandates. We observe that headquarters interventions are driven by expectations and assigned roles to manage the multinational enterprise. Being aware of what partner headquarters are doing, that is, possessing system knowledge, can prevent redundant involvement by and competition between headquarters. Our findings indicate that if headquarters' knowledge of the system is low, this may cause the emergence of conflicting headquarters voices and considerable frustration among subsidiary managers.

This paper provides insights into the dynamics of mandate loss and subsidiary charter development through exploring two research questions on what the characteristics of subsidiary mandate loss are and what roles do intra-MNE actors have in subsidiary mandate loss? The paper is based on a qualitative study of 17 cases of subsidiary mandate losses. The data revealed four distinct patterns of mandate loss depending upon what phase of mandate development the subsidiary found itself: (1) mandate loss due to a combination of failure in the new mandate or a change in the external environment. (2) mandate loss due to competition with sister subsidiaries (3) Subsidiaries shed peripheral mandates to create space and focus on the core activities (4) mature mandate loss due to misfit between subsidiary skills and that of competition in the local market. This paper contributes to the subsidiary evolution literature by elucidating the multiplicity of subsidiary mandate loss and the “prime mover” involvement in mandate loss.

Research Summary

We explore the importance of the relational attributes, trust and commitment, and their association with subsidiary development after mandate loss. We examine how greenfield and acquired subsidiaries, through their interaction with headquarters and sister subsidiaries, develop relational attributes through mutual-orientated adaption. These relational attributes are subsequently important elements in upholding and developing subsidiary activities despite the loss of a mandate. We trail this process through a longitudinal field study following the evolution of four multinational enterprise (MNE) subsidiaries. We explain how the subsidiaries relational attributes and part of their activities, associated with its mandates, remain even after the loss of a mandate. The study shows how these relational attributes mitigate and compensate for formal mandate loss.

Managerial Summary

Subsidiaries have been increasingly seen as the locomotive of MNEs value creation. This has coincided with the disaggregation of the MNEs value chain which has had a positive effect on the development of foreign subsidiaries. However, there is now more competition for responsibilities amongst subsidiaries leading to increased movement of responsibilities and activities between them. We find that the subsidiary managers relationship attributes (trust and commitment) between them, their headquarters and other subsidiaries in the MNE has a mitigating effect on the loss of these responsibilities for the subsidiary. By showing the impact of managerial micro-activities in the MNE, our study offers insights for subsidiary managers on what they can leverage to pursue subsidiary charter consolidating activities and survival, or charter enhancing activities and growth.