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Headquarters‐foreign subsidiary control relationships: three conceptual frameworks

Headquarters‐foreign subsidiary control relationships: three conceptual frameworks When a corporation establishes a subsidiary in a foreign country, its managers must decide how much control they need to maintain over the subsidiary′s managers. A headquarters‐foreign subsidiary control relationship (HSR) can be one of centralization or decentralization. The first framework proposes that national culture influences the HSR. The second framework posits that certain situational factors influence the HSR in all countries. The third framework puts forth the idea that either too much centralization or too much decentralization eventually leads to organizational ineffectiveness. Therefore, effective HSRs are those which are balanced. A balanced HSR is attained when headquarters (HQ) managers make decisions based on: an understanding of the cultural and other needs of foreign subsidiary managers; an understanding of the needs of specific organizational situations; and an organizational global vision, core values, and cultural principles which are shared by all subsidiary managers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Empowerment in Organizations Emerald Publishing

Headquarters‐foreign subsidiary control relationships: three conceptual frameworks

Empowerment in Organizations , Volume 3 (3): 10 – Sep 1, 1995

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References (45)

Publisher
Emerald Publishing
Copyright
Copyright © 1995 MCB UP Ltd. All rights reserved.
ISSN
0968-4891
DOI
10.1108/09684899510094954
Publisher site
See Article on Publisher Site

Abstract

When a corporation establishes a subsidiary in a foreign country, its managers must decide how much control they need to maintain over the subsidiary′s managers. A headquarters‐foreign subsidiary control relationship (HSR) can be one of centralization or decentralization. The first framework proposes that national culture influences the HSR. The second framework posits that certain situational factors influence the HSR in all countries. The third framework puts forth the idea that either too much centralization or too much decentralization eventually leads to organizational ineffectiveness. Therefore, effective HSRs are those which are balanced. A balanced HSR is attained when headquarters (HQ) managers make decisions based on: an understanding of the cultural and other needs of foreign subsidiary managers; an understanding of the needs of specific organizational situations; and an organizational global vision, core values, and cultural principles which are shared by all subsidiary managers.

Journal

Empowerment in OrganizationsEmerald Publishing

Published: Sep 1, 1995

Keywords: Centralization; Corporate culture; Decentralization; Multinationals; Organizational structure; Subsidiaries

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