Cross-border integration in the multinational corporation: The subsidiary management perspective

Abstract

A substantial amount of prior research has focused on the conflicting demands put on managers in multinational corporations (MNCs) as a result of simultaneous pressures for local responsiveness and global integration. However, despite this research we do not really understand how managers in subsidiaries balance pressures for integration and responsiveness. To address this issue, the research focused on how subsidiary managers interpret and respond to cross-border integration efforts originating from the corporate headquarters when also confronted with substantial pressures for local responsiveness. In relation to extant research, which tends to focus on integration from a macro perspective, this research makes a contribution to knowledge about integration from a micro-strategy and micro-politics perspective by going inside the multinational subsidiary. The empirical material consists of five case studies of mobile operators in China (1), Denmark (2), Romania (1) and Sweden (1). The research uses a constructivist grounded theory approach to understand the causes of local-global tensions at the subsidiary level and how managers respond to integration efforts. Identified causes of tension were perceptions of misfit, lack of procedural justice, weak execution, loss of personal control and cultural misunderstanding. Following from this, the research uncovered factors that led to subsidiary managers following either a rules-based logic of complying with headquarters, or shifting to a task-based logic of practical action to negotiate/challenge, manipulate or ignore headquarters‟ integration efforts. The core thesis in this research is that subsidiary managers‟ perceptions and responses are central to the outcome of corporate integration efforts. Given this, managers at headquarters have critical roles to play as sensegivers and change deployers in order to influence the sensemaking and actions of subsidiary managers.