Empirical focus

Mudambi and Navarra's (Reference Mudambi and Navarra2004) starting point is the dilemma that is connected to the increasing strategic independence of subsidiaries in multinational corporations (MNCs). On the one hand, subsidiary independence constitutes a vital prerequisite of learning and competitive advantage of MNCs. On the other hand, strategic independence and strong bargaining power enhances the subsidiaries’ ability to seek and appropriate rents that challenge the shareholder value of the MNC as a whole.

The paper aims at understanding the determinants of the political behaviour of rent-seeking by subsidiaries in MNCs. The paper addresses the question to what extent subsidiary rent-seeking is related to subsidiary bargaining power, and to what extent subsidiary bargaining power, in turn, is constituted by knowledge flows. In the model presented by Mudambi and Navarra (Reference Mudambi and Navarra2004) subsidiary power assumes a central role as subsidiary power is used as both explanandum (explained by knowledge flows) and explanans (explaining rent-seeking). The empirical analysis conducted largely confirms that knowledge flows within MNCs are strong predictors for subsidiary power and that subsidiary power is a strong predictor for the subsidiary managers’ ability to appropriate rents. In particular, subsidiaries vested with knowledge that is vital for the MNC as a whole and subsidiaries with large knowledge outflows to other MNC units tend to command a high bargaining power within the MNC and therefore a higher ability to appropriate rents.

Theoretical focus

The paper adopts a rational-system perspective of the MNC, which is blended with a natural-system perspective. While the natural-system perspective finds expression in seeing MNCs as political systems full of interest diversity, bargaining and conflict, the rational-system perspective appears to take precedence over the former. The rational-system perspective is reflected in the remnants of a hierarchical view of the MNC, where headquarters are vested with the role, power and ability to maintain overall organizational rationality. A case in point is the paper's suggestions on how rent-seeking behaviour of subsidiary managers may be curbed by headquarters. In this regard, Mudambi and Navarra (Reference Mudambi and Navarra2004) discuss the role of appropriate control structures, such as the centralized M-form, as well as motivators for subsidiary managers. The latter involves participatory management practices that serve to create subsidiary manager orientations beyond a mere opportunistic subsidiary focus with the effect of upholding the overall organizational rationality.

In a similar vein, the conceptualization of politics falls between a generic and aspectual perspective. While politics, power and conflict are seen as everyday occurrences, reflecting a generic politics perspective, the mainly negative connotation of subsidiary power is more reflective of an aspectual view of politics. In this view, subsidiary power leads to unwanted aberrations from overall organizational rationality and proper organizational life.

Hence, while the paper also adopts elements of a natural-system perspective, its overriding conceptualization of MNCs as rational systems and its aspectual view of politics, places the paper clearly within the ambit of a rationalistic-managerialist perspective.

In terms of theory, the paper builds on a combination of a differentiated network perspective, principle agent theory and implicitly on resource-dependence theory. While power assumes a key role in the paper, no specific theorization of organizational power is offered. The implicit concept of power is episodic and based on a resource-dependence perspective. Although power is not defined, the paper develops elaborate hypotheses with respect to determinants of subsidiary power. Mudambi and Navarra (Reference Mudambi and Navarra2004) see knowledge assets (research and development [R&D] intangibles mainly) as the key sources of subsidiary power. Specifically, the paper theorizes and confirms that the greater the total knowledge output of a unit, the greater its knowledge outflows to other units within the MNC, the greater the knowledge outflow to its location and the greater the level of process control exercised by a given subsidiary, the greater its bargaining power within the MNC. In sum, subsidiary power is above all rooted in the knowledge intensity and pattern of knowledge flows.

The actors considered comprise headquarters and subsidiary managers. However, as subsidiary managers’ interests are equated with subsidiary interest, the approach is essentially confined to organization-level actors.

A main goal of the paper is to develop a theory of subsidiary behaviour within MNCs. It is noted that subsidiaries tend to have their own objectives, which are only partly in alignment with the MNC as a whole. Subsidiaries and their managers’ behavioural orientation are seen as driven by two objectives. The first is external, based in ‘profit seeking’, and involves ‘maximizing shareholders’ value through market operations aimed at maximising profits’ (Mudambi and Navarra Reference Mudambi and Navarra2004: 386). The second, which is the focus of the paper, involves the appropriation of internally distributed rents.

The headquarters’ behavioural orientation, in turn, is associated with realizing overall shareholder value. This objective involves curbing the rent-seeking behaviour of subsidiaries. Put simply, while subsidiaries tend to act opportunistically to increase bargaining power with the goal to appropriate corporate rents, the headquarters aim at restricting the opportunistic behaviour of subsidiaries through monitoring and limiting subsidiary autonomy. These behavioural assumptions are reflective of the principle–agent perspective of the paper, with headquarters taking the role of the principle and subsidiaries the role of the agent.

Mudambi and Navarra (Reference Mudambi and Navarra2004) do not theorize extensively the contextual constitution of actor or subsidiary behaviour. The actors’ behavioural orientations are mainly related to their embeddedness within the MNC. Behavioural orientations of subsidiaries and headquarters are assumed as given, that is, as springing from the principle–agent relationship between subsidiaries and headquarters. This also implies that there is little consideration for variations in the behavioural orientation of different subsidiaries, let alone among different individual actors within MNC subunits. While the paper does not develop a differentiated understanding on the contextual basis of actor interests, it does provide some understanding of the contextual constitution of subsidiary power. Although this includes aspects related to the external environment, most of the contextual conditions considered are internal to the MNC. As explicated above, they mainly relate to the situation of the subsidiary with respect to subsidiary knowledge stock and knowledge outflows. As the paper shows only limited concern with respect to actor-context relations, there is also little consideration for the question if and how actors can shape their environment.

Empirical focus

Similar to the paper by Mudambi and Navarra (Reference Mudambi and Navarra2004), Andersson et al. (Reference Andersson, Forsgren and Holm2007) are interested in how the outcome of subsidiaries’ rent-seeking efforts in MNCs is affected by their bargaining power. This includes asking what determines subsidiary bargaining power. The subsidiaries’ rent-seeking efforts are conceptualized as their efforts to influence strategic decisions or, more specifically, to influence strategic investments in MNCs.

The paper by Andersson et al. (Reference Andersson, Forsgren and Holm2007) focuses on intraorganizational power in MNCs and its sources. The paper pays particular attention to the question to what extent varying subsidiary influence can be explained by the subsidiary's embeddedness within an external business network. The paper finds that the strength and influence of the subsidiary's external business networks only matter for subsidiary power if the subsidiary provides technology to other units within the MNC. In other words, a strong external subsidiary network only provides a subsidiary with an influence in the MNC, if the subsidiary contributes to the internal network. Andersson et al. (Reference Andersson, Forsgren and Holm2007) also find that headquarters’ knowledge about the subsidiary's external business networks has a moderating effect on subsidiary influence. Put differently, the authors focus on subsidiary influence in MNCs as an explanandum and see different bases of power, primarily networks and derived resource-dependency situations, as their explanans.

Theoretical focus

The paper falls half way between a rational and natural system perspective of MNCs. On the one hand, the paper gives up the idea of an MNC as a hierarchically coordinated and controlled entity that is able to fully maintain a centrally defined and overarching organizational rationality. On the other hand, the paper still falls into a rationalistic-managerialist stream as it sees headquarters and subsidiaries or their management as rational actors furthering the strategic interests of their units by employing sources of power towards the units’ own ends or interests.

In comparison to Mudambi and Navarra (Reference Mudambi and Navarra2004), however, Andersson et al. (Reference Andersson, Forsgren and Holm2007) move further away from an aspectual view of politics and are closer to adopting a generic politics perspective. In this view, politics, power and conflict are defining elements of organizational life in MNCs. A further expression of the natural-system perspective and the related generic politics perspectives is seeing organizational life in MNCs as marked by both conflict and tension but also by collaboration and coalition.

Andersson et al. understand MNCs as federative entities that are constituted by multiple actors and ‘dispersed structures of power’. Such a perspective implies that ‘the headquarters is perceived as one player among others’ (Andersson et al. Reference Andersson, Forsgren and Holm2007: 808) in the corporate bargaining processes. The actors considered are at the organizational level and comprise subsidiaries and headquarters. Their main behavioural orientation is geared towards influencing strategic decisions in MNCs in their interest. This also implies that units tend to have different interests based on their role and embeddedness within and outside the MNC. Although headquarters are seen as one player among others, Andersson et al. (Reference Andersson, Forsgren and Holm2007) still hold on to seeing headquarters’ behaviour as geared towards the MNC as a whole.

In the corporate bargaining processes, actors differ in their ability to influence strategic decisions. This points to differences in power among actors which are related to their divergent bases of power. In this sense, the contribution contests a simple rationalistic-managerialist perspective of hierarchical power in which top management oversees, controls and governs the MNC in line with clearly defined organizational goals (c.f. Mudambi and Navarra Reference Mudambi and Navarra2004 who are more optimistic about headquarters’ ability to maintain overall organizational rationality of the MNC).

The paper builds on an episodic understanding of power where actors employ available power bases to pursue their interests in instances of organizational politics. In terms of theoretical roots, the paper combines network, intraorganizational power and resource-dependency perspectives. The conceptualization of power builds primarily on a Weberian definition of organizational power as adopted by Dahl (Reference Dahl1957) and Emerson (Reference Emerson1962). Andersson et al. (Reference Andersson, Forsgren and Holm2007) concede that concepts of power are context specific. In the context of understanding subsidiary power and influence, they find power ‘to be strongly associated with the ability to “win” political fights: that is, it is the ability of the headquarters and the subsidiaries to get things done, regardless of the motivation of and resistance from others within the MNC’ (Andersson et al. Reference Andersson, Forsgren and Holm2007: 805). Moreover, to identify bases of power within a federative MNC, they draw on a resource-dependence perspective-based understanding of power (e.g. Pfeffer and Salancik Reference Pfeffer and Salancik1978). Specifically, ‘a subunit's access to resources that are critical for other subunits in the federative MNC is the primary base of power, rather than personal traits like reputation or charisma’ (Andersson et al. Reference Andersson, Forsgren and Holm2007: 805). A subunit's access to resources, in turn, is constituted by the relationship the unit has with its business network. Moreover, drawing on Krackhardt (Reference Krackhardt1990), Andersson et al. (Reference Andersson, Forsgren and Holm2007) argue that power may not only be based on the network centrality but also on the network knowledge of a subunit. In this view, subunit power can also be rooted in an accurate perception of the network, irrespective of a unit's own network position. In summary, network embeddedness and network knowledge are theorized as key sources of power in MNCs. Following this perspective, key sources of subsidiary power are the degree of subsidiary embeddedness in its local business context. However, the latter only serves as a source of power if a subsidiary is important for the competence development of other units in the MNC. The authors also argue that subsidiary influence can only be properly understood if we consider the balancing power or counter-forces of the headquarters. The headquarters’ power for its part includes its formal authority, but goes beyond it, as it crucially rests on headquarters’ knowledge of subsidiary external networks based on monitoring these networks.

In comparison to Mudambi and Navarra (Reference Mudambi and Navarra2004), Andersson et al. (Reference Andersson, Forsgren and Holm2007) pay more attention to the contextual constitution of both actor interests and resources. Andersson et al. (Reference Andersson, Forsgren and Holm2007) very explicitly relate the actors’ behavioural orientations, that is, the interests and power of organizational units, to their embeddedness inside and outside the MNC. The embeddedness or actor-context relationship is conceptualized as relationships between actors that are tied to each other through resource exchanges. While the internal embeddedness involves the question of to what extent a subunit contributes to the competence development of other units, the external environment relates to subunit's external business network embeddedness. The perspective takes a particular close look at how the local environment constitutes a power base of subsidiaries. It emphasizes that the ‘effectiveness of a subsidiary's linkages with its local environment as a power base can vary…depending on the characteristics of these linkages, including with whom the subsidiary has linkages’ (Andersson et al. Reference Andersson, Forsgren and Holm2007: 803). So the paper accentuates specific relationships with key customers and suppliers. Although the internal and external environments are important to understand the behavioural orientation of different organizational actors in MNCs, the paper does not theorize much on the ability of organizational units to shape and structure their environments. Nevertheless, there is some implicit understanding that just as headquarters can develop a better knowledge of subsidiary external networks, so subsidiaries can develop their external business networks over time. In this sense, subunits as actors in MNCs are not viewed as fully determined by their environment but rather as agents who can proactively develop their environment.

Empirical focus

At the core of this conceptual paper lies the question of how low-power actors in MNCs gain influence. Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) look at subsidiary units in low-power status positions within the MNC. In focusing on this question, the paper is quite distinct from the two previous ones. First, it does not look primarily at the powerful actors and their sources of power but rather at the variety of political strategies that low-power actors can employ to gain influence. Influence is seen as the achievement of three types of strategic objectives, which are achieving legitimacy, controlling resources upon which others depend and gaining centrality in the intraorganizational network. Second, the paper emphasizes agency and degrees of freedom of low-power actors and, thereby, challenges politics and power perspectives that see actors and their behavioural orientation as determined by structural or contextual embeddedness. Third, the paper shifts from a static perspective to a more dynamic perspective of politics in MNCs. It does so by discussing a wide range of political games that can serve to challenge and change the status quo of the power balance within the MNC. Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) summarize their approach as follows:

Politics and power are at the very core of this paper. Political games are the explanans for the shifting power and influence of low-power subsidiaries in MNCs (explanandum).

Theoretical focus

In our trilogy of rationalistic-managerialist papers, the paper by Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) moves closest to a natural system perspective of organizations. In comparison to Andersson et al. (Reference Andersson, Forsgren and Holm2007), organizational life in MNCs becomes even messier. While low-power subsidiaries are assumed to behave rationally in their interest, that is, trying to gain more power and influence, there is no guarantee that they will succeed with the alternative strategies they resort to. This is because political dynamics are too complex to make straightforward predictions about possible outcomes. In this context, Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) also speak of a ‘cacophony’ of competing initiatives, where actors at different levels pursue their strategic interests. In this sense, Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) move very close to seeing MNCs as natural systems.

Similarly, the politics perspective adopted can be understood as generic, as MNCs are seen as ‘highly political arenas’ in which ‘factions, coalitions, and cliques are continuously trying to influence one another to advance the interests of their members’ (Bouquet and Birkinshaw Reference Bouquet and Birkinshaw2008: 492). As organizational life is constituted by political games and micropolitics, the organizational behaviour of MNCs is largely a reflection of political interests. It is evident that this perspective challenges the idea of MNCs as hierarchically coordinated and controlled entities that follows a centrally defined and overarching organizational rationality.

The paper relates politics and power closely to each other in a causal means–ends relationship. In this view, politics, or rather political games, are the means to change the power balance and to gain influence. While this understanding is indicative of an episodic view of power where power games are used to pursue recognized interests in instances of organizational politics, the paper's power perspective also shades into a systemic perspective because it addresses the question how low-power actors can challenge an extant structure of domination in the MNC.

As in the previous papers, the actors considered are primarily organizational units within the MNC. Even though there is some mentioning of subsidiary managers, their behavioural orientation is equated with that of the subsidiary. The focal actors in this contribution are the subsidiaries who are understood as semiautonomous actors. The conceptualization of subsidiary actors as semiautonomous stresses that while subsidiaries are hierarchically dependent on their corporate parents they tend to have substantial degrees of freedoms and powers to influence the organizational behaviour in MNCs.

To develop a comprehensive understanding of the behavioural orientation of actors, or more specifically of the low-power actors, the paper synthesizes three theoretical lenses on power and influence in MNCs. Specifically, to understand the interests of low-power actors in MNCs, the paper draws on new institutionalist (e.g. DiMaggio and Powell Reference DiMaggio and Powell1983; Scott Reference Scott1987), resource-dependency (e.g. Bacharach and Lawler Reference Bacharach and Lawler1980; Pfeffer Reference Pfeffer1981, Reference Pfeffer1992; Pfeffer and Salancik Reference Pfeffer and Salancik1978) and social network perspectives (e.g. Hickson et al. Reference Hickson, Hinings, Lee, Schneck and Pennings1971). Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) argue that low-power actors follow three ‘strategic objectives’ to gain influence. They comprise, in correspondence with the theories mentioned, the objective of increasing legitimacy, the objective of controlling critical resources and the objective of gaining centrality in corporate and external networks. It is assumed that these three objectives are crucial for gaining power and influence within the MNC. Importantly, these three objectives, legitimacy, resource dependency and network centrality, are seen as interrelated. While resources are the means that contribute to power and influence, resources without an actor's legitimacy or centrality may not be effective in influencing upper or central actors within the MNC (Bouquet and Birkinshaw Reference Bouquet and Birkinshaw2008: 489).

Bouquet and Birkenshaw (Reference Bouquet and Birkinshaw2008) argue that low-power actors can resort to two broad approaches to reach their objectives. The first involves adopting ‘creative strategies’ that are geared to challenging the status quo in the MNC. The second involves playing political games with the aim of establishing an agenda in the existing ‘circuits of power’. Regarding the first option of challenging the status quo Bouquet and Birkenshaw (Reference Bouquet and Birkinshaw2008) discuss three different approaches:

Breaking rules involves particularly high levels of risk as it implies that subsidiaries are working around or outside the corporate system to change their position and power. Cases in point are subsidiaries teaming up with local governments to leverage external resources or external legitimacy, to enhance their internal standing and reputation.

Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) distinguish six types of power game based on whether strategies rest on individual or collective efforts (modes of action) and whether they involve addressing simple, complicated or complex problems (problem resolution). These different games are discussed at some length including the question of how readily available and risky they are. Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) also elaborate that these games do not equally benefit the different objectives as there are different trade-offs to consider. Finally, they allude to the condition that power games are highly intertwined which adds to their complexity and a need for holistic perspectives when playing them.

Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) only partially relate actors and their behavioural orientation to their contextual and external environmental embeddedness. On the one hand, the fact that some subsidiaries are at a given point in time low-power actors is directly related to their contextual situation (low legitimacy, low resources and low network centrality) within and outside the MNC. In a similar vein, subsidiary objectives of overcoming their weak position in the MNC are also informed by their internal and external situation. On the other hand, the authors stress that overcoming this situation is not entirely constrained or determined by the current contextual embeddedness of the subsidiary. After all, the main message of the paper is that even weak or low-power actors have a substantial scope for agency, even if their legitimacy, resources and network centrality is low. The authors are, however, ambivalent with respect to how much scope for agency there really is. In other words, the degrees of freedom of low-power actors in choosing their means or strategies are not entirely independent of the current structural situation of subsidiaries. Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008) illustrate, for instance, that the strategy of ‘breaking the rules’ may rely on leveraging the influence of strong actors or institutions in their local environment. Similarly, political games based on ‘coalition building’ depend to some degree on shared interests as well as on more or less established relations with other units. Moreover, the game of comopetition is only available to units that have already built up some legitimacy and hold some critical resource base or network position.

Nevertheless, the main message of the contribution is that low-power actors are not held hostage by their structural constraints but have always some scope for agency. Agency implies, in turn, that actors can turn the tables by changing their internal and external situation. In this sense, the paper sees the environment as malleable, conceptualizing the actor-context relation as a recursive one.

Empirical focus

Morgan and Kristensen's (Reference Morgan and Kristensen2006) conceptual paper starts with the puzzle of ‘institutional duality’ related to the question of how multinational corporations (MNCs) deal with home and host country specific pressures and ‘pulls’ (Westney Reference Westney, Ghoshal and Westney1993). However, in contrast to mainstream institutionalist studies where the question of ‘pulling’ is mainly discussed in rather neutral and passive terms, as home and/or host country effects, the authors describe the puzzle of ‘duality’ in political terms by referring to MNCs’ ‘contested spaces’ and thus put powerful key actors within the headquarters and subsidiaries in the driving seat. Accordingly, it is stressed that the transfer of knowledge and resources from headquarters to subsidiaries ‘makes micropolitics essential to an understanding of multinationals’ (Morgan and Kristensen Reference Morgan and Kristensen2006: 1469). The central empirical question from a micropolitical angle, it is stressed further, is how far key actors within the subsidiaries are able to participate in negotiations with key actors within the headquarters when it comes to cross-national transfers of ‘processes, people and resources’ (ibid.).

The paper starts with a critique of the rationalistic-managerialist perspective of MNCs by arguing that institutional analysis has helped to correct some of the shortcomings of the economic models of the MNC. It is further argued that institutionalists have rightly pointed to diverse contextual rationalities constituting the ‘transnational social spaces’ of MNCs (e.g. Morgan Reference Morgan, Morgan, Kristensen and Whitley2001), but their chief empirical focus on external institutional pressures made it difficult to capture the dynamic aspects and the micropolitical nature of the institutional duality of MNCs. In order to capture the micropolitical nature of institutional diversity it is therefore suggested that we study MNCs as:

From such a perspective the empirical focus is on the variety of political contests and conflicts emerging between key actors associated either with the headquarters and/or local subsidiaries, which are based on often quite contrary interests and identity differences. To put it differently, when micropolitics move into the centre stage of the study of MNCs, actors are still seen as being co-constituted by institutions. The latter, however, do not just constrain political strategizing inside and outside MNCs, but also enable certain forms of political activities, ranging from straight complaints to aggressive forms of political bargaining at the subsidiary level. Similar to Clark and Geppert's (Reference Clark and Geppert2011) ideas about political sensemaking, powerful key actors are not just understood as being rule-takers when making sense within the contested space of the MNC but also as rule- and sense-givers, who actively take part in on-going local institution-building processes.

To sum up, different types of micropolitics within MNCs, played between key actors in headquarters and the subsidiaries, are the empirical focus of this article. Different types of micropolitics are the explanandum, which are triggered by various processes of knowledge and resource transfer, usually initiated by the headquarters in order to create coherency of organizational structures and processes, because of and despite institutional differences. The explanans (the ingredients) for different types of micropolitics are the strategic resources which local key actors are able/unable to make use of when trying to resist HQ-imposed transfers of ‘processes, people and resources’.

Theoretical focus

The paper falls into the natural perspective of organizations. Interest and identity differences and related conflicts between key actors within the headquarters and local subsidiaries are at the centre of the analysis. Compared to rationalistic perspectives, actors’ political strategizing approaches and related interest differences between key actors are not only explained with reference to internal MNC power relations and hierarchical structures but are seen as co-constituted with reference to home and host country specific institutional differences.

The theoretical roots of the paper are very much in the tradition of comparative institutionalism. Clear references are made to theories of varieties of capitalism (Hall and Soskice Reference Hall and Soskice2001) and divergent capitalism (Whitley Reference Whitley1999) and, to some extent, also to new institutionalism, especially to research by Kostova et al. (Reference Kostova, Roth and Dacin2008). However, in contrast to these rather structuralist explanations of how external institutional pressures determine the internal organizational behaviour of MNCs, the authors apply an actor-centred institutionalist perspective, which concentrates on the internal micropolitical dynamics and actors involved. Based on the ideas of Crozier (Reference Crozier1964) they highlight that a core question is about how micropolitical contests about accounting and performance ‘numbers’ (Morgan and Kristensen Reference Morgan and Kristensen2006: 1746) are locally interpreted and socially mediated between powerful actors. Transfer processes, it is stressed further, are often initiated by the headquarters to improve the performance of the MNC as a whole and of individual subsidiaries. Consequently, micropolitical contests are triggered by different uses and interpretations of ‘numbers’ which are a core problem of justifying and locally legitimizing cross-national transfers from headquarters.

MNCs are thus conceptualized as ‘contested spaces’ and four ideal-typical forms of micropolitics are distinguished. The latter are triggered by two distinct strategic transfer approaches of the HQ plus two distinct forms of local resistance. The two headquarters-initiated transfer approaches are typified as: (i) ‘transfer to subsidiaries of practices, processes, policies and work systems within a framework of benchmarking and “coercive comparisons”’; and (ii) ‘transfer to subsidiaries of financial capital (for new investment), knowledge capital (to become research and development [R&D] centres) and reputational capital (to become exemplar of a process)’ (Morgan and Kristensen Reference Morgan and Kristensen2006: 1475). The two local modes of resistance are characterized as: (iii) ‘high resistance’ to headquarters, which is related to cohesive subsidiaries, which are highly locally embedded; and (iv) ‘low resistance’, which is related to lack of cohesion of subsidiaries and low local embeddedness (ibid.). The four ideal-typical forms of micropolitics discussed in the article are described as a mixture of these two-by-two approaches but are also discussed in the context of wider global societal institutional processes, i.e. the increased dominance of capital markets on the political behaviour of and within contemporary MNCs. This is seen as a key reason for the rise of quantified subsidiary performance measures via benchmarking and ‘coercive comparisons’. Accordingly, it is shown that micropolitics will show higher degrees of resistance when subsidiaries are highly locally embedded. This form of micropolitics, which can mainly be found in coordinated market economy contexts, is compared with subsidiaries in liberal market economies, which often have weak local network support and resources. In short, local actors here can draw on only limited ‘toolkits’ to organize effective forms of local resistance (see also Williams and Geppert Reference Williams, Geppert, Dörrenbächer and Geppert2011). Accordingly, the concept of power is mainly applied in an episodic manner when distinguishing different forms of micropolitics. However, they also make references to systemic power when headquarters’ transfer strategies are seen as closely intertwined with wider societal features of dominant international financial capital market influences on organizational behaviour within MNCs.

The study highlights that ‘coercive comparisons’ of subsidiary performance might lead to a further weakening of the power sources of subsidiaries which are already weak in terms of coherence and of local resource. This will hinder them from organizing forceful resistance to headquarters’ demands. This problem is seen as a typical scenario for micropolitics of subsidiaries operating in liberal market economies. Here it is stressed that local actors and especially managers are keen to prove that they can play ‘the numbers game’ and manage their subsidiaries according to central benchmarks set by the headquarters not least because industrial relations systems are weak and the ‘power of organizations over employees is strong’ (ibid.: 1477). Micropolitical approaches of subsidiaries operating in coordinated market economies, however, are seen as better equipped to organize potent local resistance because of the high degree of local embeddedness often based on more supportive industrial relations systems:

The role of local key actors and how they try to win competitive micropolitical games triggered by headquarters’ distribution and rewarding of strategic resources to subsidiaries is addressed by Morgan and Kristensen (Reference Morgan and Kristensen2006: 1479–1482) with reference to research by Delany (Reference Delany, Birkinshaw and Hood1998). Consequently, the authors distinguish between ‘boy scout’ and ‘subversive’ strategies of local actors when discussing the question of whether and how both strategic approaches are able to influence the distribution and reward decisions of headquarters’ management. It is highlighted that ‘boy scouts’ are more likely to follow the demands of the headquarters because these actors are more likely to be interested in developing their individual careers and moving up within the hierarchy of the MNC. This limits not just their interests in mobilizing local resources to influence and resist certain global standardization and benchmarking strategies, but also local institution building because the increase of the subsidiary mandate and leadership in R&D is not part of their often narrow individualistic agendas. ‘Subversive’ local strategizing, however, is described as a continuous focus on enlarging and improving subsidiary mandates. The latter is supported by the deep embeddedness of subsidiaries in local innovation and supplier networks. This also means that these actors’ micro-political strategizing is likely to be more resistant against headquarters’ global standardization approaches that undermine local power sources and institution-building (ibid.). It is concluded that increased benchmarking and ‘coercive comparisons’ will trigger two quite opposite forms of micropolitics:

In short, the conceptualization of actors is seen as contextually determined: headquarters and subsidiary key actors are described as being strategically oriented, on the one hand. On the other hand, both headquarters management transfer approaches as well as local forms of resistance are also conceptualized as highly situational rational.

Empirical focus

The aim of this paper is a move away from the focus on aggregate concepts and dominant actor groups, which have been the main foci of industrial relations explanations of conflict. In contrast, Blazejewski (Reference Blazejewski2009) investigates a particular conflict between a multinational company headquarters and its subsidiaries in Germany from a micropolitical perspective by highlighting the views and actions of a marginalized group in the German system of industrial relations and in multinational companies more generally, shop stewards.

An in-depth investigation is conducted into the 2004 strike at General Motors (GM) Opel in Germany based on reports and interviews in published material on the conflict process. The conflict was ostensibly about multinational restructuring plans and job losses, although further investigation revealed ‘multiple, competing interests and internal conflict lines as key driving forces behind the 2004 Opel crisis’ (Blazejewski Reference Blazejewski2009: 244). These went beyond the immediate restructuring and proposed job cuts to conflicts within the workforce about how to respond to this within the wider context of the assignment of production charters by GM and their European brand strategy using a calculation and allocation of losses which was seen as unfair by GM subsidiary management. Thus, although the focus of the research is on a specific conflict episode, this conflict takes place within wider conflicts in MNCs as part of the process of globalization, which involve a range of actor groups, both management and workers, across Germany, Europe and globally.

The explanandum in the article are the different responses of the local actors involved in the GM conflict, where there were competing rationalities in play in the workforce, particularly between the shop stewards and the formal workforce representative body, the works council. The explanans are based on the importance of local contexts, traditions and identities to local actors like shop stewards rather than on the formal industrial relations institutions in Germany. This helped to explain the very different responses from the workforce representative groups across the different GM sites in Germany, including within the Bochum plant itself. Intranational and intrafirm differences are thus highlighted by the article rather than any convergence based on the national system of formal industrial relations institutions and the multinational company and subsidiaries as homogenous units.

Theoretical focus

The article provides an overview and a critique of a number of prominent research fields focusing on multinational companies and actor interests. Institutionalist research streams, for example, focus on home and host country influences on actors in multinational companies and their subsidiaries but investigation tends to be limited to the effects of national level institutions on formal industrial relations actors, not on different local contexts and more micro-level actors (Almond and Ferner Reference Almond and Ferner2006). Often a deterministic perspective is also adopted in understanding how national contexts influence actor behaviour.

Blazejewski's (Reference Blazejewski2009) article, in contrast, focuses on the ambiguities of national institutions and how they are subject to different interpretations by actors depending on different actor interests. Based on Giddens’ (Reference Giddens1984) concept of duality, actors are also able to influence institutions and help shape their operation through their reinterpretation and selective application of practices and rules. The study makes use of two key research streams to focus attention on actors and their micropolitical behaviour: micro-organizational/politics literature and the concept of the ‘situation’ as well as recent work in varieties of capitalism and labour process theory on intranational heterogeneity. The article further develops the concepts of actor interests, motivations and conflict of interests, whereby institutions are, for example, seen as repertoires from which actors can select based on their interpretation of interests. The concept of ‘situation’ or ‘interest-based contextual constitutions’ (Blazejewski Reference Blazejewski2009: 233) is used to illustrate the fact that institutions may or may not feed into the actors’ definitions of a situation depending on whether they are seen as important for pursuing their interests. Thus the combination of actor interests plus situation is used to explain the different responses of the workplace actors in the GM conflict.

The focus of the article is an explanation of the two very different rationales of the workforce in GM Opel's Bochum plant, where shop stewards and the works council each interpreted the contextual framework they were working in very differently; each group made use of different elements of the context depending on the perception of their interests. For example, the shop stewards emphasized the local environment as key and made use of a strong local identity of fighting for workers’ rights against large multinational companies and wide community support in a local situation where there were high levels of local unemployment. In their view, the formal problem-solving route of negotiations between works council and management had failed as they had not been able to prevent job losses as part of the restructuring programme so they now took recourse to unofficial strike action against the company. The works council, in contrast, continued to emphasize their formal legitimation as legal actors in the workplace and established procedures based on negotiation as the only means of dealing with the conflict issues. The article investigates the process by which the works council was eventually successful in bringing the unofficial strike action led by the shop stewards back within the ambit of the official framework of cooperation with management. Situational changes, in the form of works council-union (IG Metal) cooperation to take control of the unofficial action and GM's offer of a generous compensation scheme for workers made redundant, led to a change in the dynamics from unofficial strike action led by the shop stewards to formal negotiation led by works council members.

In line with Morgan and Kristensen (Reference Morgan and Kristensen2006), Blazejewski (Reference Blazejewski2009) views the multinational company as a contested social space within which a wide range of different actor groups with different interests draw on their different contextual situations in different ways to defend their interests. The focus on underrepresented groups such as shop stewards is of particular note in this study, highlighting as it does the very different intrafirm interests of different groups in the workforce even in the same plant. The ways in which the shop stewards draw on elements of the local context in their interpretation of worker interests in contrast to the works council which draws on its formal rights in the national system of employment relations illustrate the importance of taking subnational contexts into account in any investigation of conflict processes in multinational companies.

Empirical focus

The starting point of the article by Becker-Ritterspach and Dörrenbächer (Reference Becker-Ritterspach and Dörrenbächer2011) is that mainstream research on intrafirm competition and subsidiary mandate change in the international business (IB) literature has paid little attention to the political dimensions of competition within MNCs. A core interest of this conceptual paper is therefore to develop an alternative actor-centred framework, based on the concept of organizational micropolitics. The authors aim to shed some light on the questions of: (i) who the key actors are; (ii) what their behavioural rationales are; and (iii) what the contextual conditions of micropolitics are. Taken together these questions lead to a micropolitical agenda for the study of intrafirm competition in MNCs.

The paper identifies a clear research gap in the IB literature, which emerges because of the limited conceptual understanding of dominant rationalistic-managerialist and contingency theory approaches on intrafirm competition within MNCs. Moreover, IB research on subsidiary mandate development and innovation tends to concentrate on political bargaining between HQ and subsidiaries, where both subunits are largely conceptualized as relatively homogenous collective actors. Different political strategizing approaches of and between individual actors within a certain subunit, such as within a particular local subsidiary, are often overlooked. Instead it is assumed that the political interests of local key actors are in line with the overall strategic approach of the organizational subunit and/or the MNC as a whole.

In contrast to these views Becker-Ritterspach and Dörrenbächer (Reference Becker-Ritterspach and Dörrenbächer2011) emphasize the important role of diverse interests and of conflicting political goals between powerful key actors at local subsidiary level, because these might lead to suboptimal bargaining approaches for the subsidiary as a whole, especially when own political interests harm local resource- and institution-building processes (see also Clark and Geppert Reference Clark and Geppert2011). Consequently, it is suggested that the empirical analysis of the micropolitics of intrafirm competition in MNCs needs to start bottom-up, from the individual level of subsidiary managers:

To put it differently, the abilities and willingness of all subsidiary managers to get involved in political strategizing in order to mobilize local resources for upgrading or against downgrading initiatives of the headquarters are not seen as similar or as driven towards the achievement of common individual goals. Thus, the key empirical focus of the article is on the diversity of individual interests of powerful key actors within a local subsidiary which are explained in terms of differences in their career paths, career aspirations and positions within the hierarchy of the MNC. The authors’ key empirical question is: how do these different individual characteristics of subsidiary managers inform their micropolitical strategizing approaches in intrafirm competition for scarce resources and negotiations about headquarters-initiated mandate changes? Different resource mobilizing strategies of subsidiary managers are the explanandum. Differences in the individual strategic orientations of key actors in terms of career interests and the availability of resources within and outside the situational context of the MNC are the explanans.

Theoretical focus

The paper contributes to a natural perspective of organizations by focusing on multiple and conflicting interests of key actors within MNCs. In line with Morgan and Kristensen (Reference Morgan and Kristensen2006), MNCs are seen as being ‘contested’ social spaces where intrafirm competition for resources, influence and reputation triggers micropolitical struggles between key actors in the headquarters and subsidiaries. In comparison to Morgan and Kristensen (Reference Morgan and Kristensen2006), however, the focus is clearly on the individual actors and their strategic orientations, which make use of contextually situated resources in the micropolitical games they play in the light of intrafirm competition.

The theoretical roots of the paper are clearly in organization theory. In line with Weber's (Reference Weber1947) and Pfeffer's (Reference Pfeffer1981) seminal research, power is defined ‘as the ability of actors to influence the process of intrafirm competition in their interest’ (Becker-Ritterspach and Dörrenbächer Reference Becker-Ritterspach and Dörrenbächer2011: 542). It is further argued that power is not a property of certain actors but ‘relational’, based on the exchange of resources (see also Clegg et al. Reference Clegg, Courpasson and Phillips2006). Related to the latter, the authors stress that ‘both the availability of resources and the ability to engage in resource exchange relationships in organizations’ (ibid.: 542) constitute political strategizing in MNCs.

When conceptualizing the ‘abilities’ of subunits within organizations the authors refer to theories about intraorganizational politics and here especially to the work of Astley and Zajac (Reference Astley and Zajac1990, Reference Astley and Zajac1991). At the centre of the discussion are questions about which resources the power of subunits is based on, the role of strategic orientations of subunits and their contextual situatedness. It is, however, also highlighted that the role of individual actors has been neglected by this stream of literature and that individual actors’ strategizing approaches might be quite different and even contradictory to the approaches followed by a specific subunit or the organization as a whole. That is why a micropolitical approach of intrafirm competition is adopted. In their conceptualization of micropolitics, the authors draw on the seminal work of Crozier and Friedberg (Reference Crozier and Friedberg1980) and thus an episodic understanding of organizational power relations is at the focus of analysis.

It is emphasized that all individual actors’ political approaches rely on established resource exchange relations (means) which can be developed into effective ‘toolkits’ by successful micropolitical players (see also Williams and Geppert Reference Williams, Geppert, Dörrenbächer and Geppert2011) when they seek to change the rules of the game (ends) in order to gain influence, e.g. for bargaining about upgrading mandates or resisting HQ strategies of mandate downgrading. In line with Crozier and Friedberg (Reference Crozier and Friedberg1980), power relations are understood as being highly context-specific and based on ‘uncertainty zones’, from which sources of power for individual actors emerge. These are: (i) special skills and functional specialization; (ii) relations between an organization and its environments; (iii) control of communication and information; and (iv) the existence of general organizational rules (Becker-Ritterspach and Dörrenbächer Reference Becker-Ritterspach and Dörrenbächer2011: 544). The willingness of actors to make use of these sources when playing micro-political games, however, is seen as intertwined with the geographical, hierarchical and functional positions of individual subsidiary managers, all of which strongly influence their future interest in following certain career paths and aspirations or their desire for either ‘going local’ (Loveridge Reference Loveridge, Geppert and Mayer2006) or moving up in the organizational hierarchy. So, how are the above building blocks of the micropolitical framework for the study of intrafirm competition applied in the context of the MNC?

The paper develops nine prepositions to explore whether subsidiary managers might act in favour of their subsidiaries, e.g. in negotiations about mandates, and whether they are willing to resist unreasonable demands from HQ which would limit the power base of the subsidiary as a whole in intrafirm competition. To put it differently, when addressing one of the key questions of the article, whether subsidiary managers will turn into ‘assets’ or ‘liabilities’ for their local subsidiaries when engaging in the micropolitics of intrafirm competition (outlined in prepositions 7–9), a first set of prepositions (1–3) around the question of how current career paths and hierarchical positioning of the local managers are linked to the actors’ abilities to mobilize resources is important. Consequently, it is proposed that:

It is assumed that power episodes leading to mandate gains are related to proactive actors who are highly locally embedded. Thus proactive micropolitical strategizing is recursively linked with key actors’ strong interests in local career paths and positions. The opposite is proposed for subsidiary managers who have limited abilities to mobilize resources when engaging in local resource-building initiatives. They are described as passive political strategists because of their limited local engagement and limited interest in local affairs, career paths and positions.

The second set of prepositions (4–6) is focused on the question of the strategic orientation of local key actors, especially about their career aspirations of either remaining or moving on to another subsidiary or to the HQ. Therefore, it is proposed that:

Moreover, the opposite is proposed for subsidiary managers who move a lot within the multinational group and have career aspirations beyond the local subsidiary. They are less likely to see the local subsidiary as an ‘asset’ and thus micropolitical engagement for building local resources is quite restricted.

In conclusion, the paper provides a strong conceptual framework for the analysis of episodic power and for capturing highly context-specific forms of micropolitical strategizing of subsidiary managers related to their career paths, position and aspirations. The article does not, however, go into much detail about the underlying elements of the systematic power in comparison to the conceptualization of micro-politics in Morgan and Kristensen's approach (Reference Morgan and Kristensen2006), which strongly linked micropolitical game-playing with the dominant role of capital markets and the financialization of contemporary MNCs.

Empirical focus

This article focuses on the sensemaking roles played by powerful social actors in the post-acquisition integration process of constructing a new relationship between the MNC and the acquired subsidiary. The actors investigated include the senior decision makers in the post-acquisition transition management team, both headquarters and local subsidiary managers. Multinational enterprises are seen as highly politicized organizations with conflicting relations between different actors, in this case between headquarters and subsidiary managers. Since the focus of the study is Western multinational companies which have purchased brownfield sites in post-socialist countries, conflict relations are expected to be all the more marked due to the very different Western and post-socialist manager viewpoints, interests and institutions. Contexts are important and ‘expressed in political actions of powerful actors’ (Clark and Geppert Reference Clark and Geppert2011: 396). The political sensemaking approach emphasizes the importance of identity construction and institution building work, which is central to the process of integrating two different organizations from two different contexts. In this process, to achieve their political interests, social actors draw on a variety of power sources, some structural but also informal and emergent forms (Clark and Geppert Reference Clark and Geppert2011: 397).

Theoretical focus

Key theories drawn on in the article are organizational identity theory (Clemens and Cook Reference Clemens and Cook1999) and institutional views of MNCs (Kostova Reference Kostova1999). Subsidiary identity formation is seen as a political process reflecting different actor interests through a process of sensemaking and sensegiving (Clark and Geppert Reference Clark and Geppert2011: 399). This takes place against a background of different institutional contexts which influence the actors’ views on the organized practices of the MNC. A high level of institutional distance between HQ and the subsidiary, for example, will influence the levels of dissent between local and HQ managers (Clark and Geppert Reference Clark and Geppert2011: 396).

The authors focus in the article on disputes about the acquired site's identity or central characteristics and its institutions (its main organizational practices). In the authors’ view this ‘construction of subsidiary identity and institutions is a political accomplishment of powerful actors who engage in sensemaking to interpret each other's political interests and stances and sensemaking to enforce their own preferences on the subsidiary’ (Clark and Geppert Reference Clark and Geppert2011: 396).

Their approach to relations between the MNC and the subsidiary in the post-acquisition integration stage is processual, political and actor-centred. The process of confronting and resolving conflicts over the nature of the subsidiary, its meaning and the legitimacy of its structures (Clark and Geppert Reference Clark and Geppert2011: 397) is the explanadum. The explanans are based on the political interests of the key actors involved who draw on a range of power sources to promote their viewpoints in a process of political sensemaking (Clark and Geppert Reference Clark and Geppert2011: 397). The potential for conflict in this process is seen as great, particularly in the cases investigated of Western MNCs and their post-socialist brownfield subsidiaries.

The context in which this process of sensemaking by the key actors takes place is multilevel: local, corporate and global. Whilst headquarters’ actors draw on the global and corporate levels in their understanding of the subsidiary's pre-acquisition status and its initial strategic assignment (Clark and Geppert Reference Clark and Geppert2011: 399), subsidiary actors will focus more on the local context. These different context rationalities are seen as reflected in the actors’ meanings and interests expressed in the process of political sensemaking, whereby they seek to realize their subsidiary identity and institutional preferences in the post-acquisition process dynamic. A variety of potential outcomes of this process are possible: organizational order, organizational impasse, conflict or change (Clark and Geppert Reference Clark and Geppert2011: 400).

Four different post-acquisition scenarios are conceptualized in Clark and Geppert's (Reference Clark and Geppert2011) paper based on the different headquarters and subsidiary views of subsidiary identity. From the headquarters actors’ point of view, the subsidiary can be viewed either as a ‘strategic dependant’ with limited autonomy or as a ‘strategic partner’ with a more creative mandate. From the post-socialist subsidiary manager point of view, subsidiary identity can be either that of a ‘local patriot’, locally embedded with local interests at the centre, or as a ‘cosmopolitan player’, more open to learning from the MNC.

The processes involved in sensemaking by the actors using these different perspectives produce a number of different scenarios ranging from consensual sensemaking of both sides (a strategic partner and cosmopolitan player combination), defensive sensemaking (with strategic partner and local patriot combinations), dominated sensemaking (strategic dependant and cosmopolitan identities) and, finally, oppositional sensemaking with contested adoption and institutional crisis in the post-acquisition process (a combination of a strategic dependant and a local patriot identity). Thus the process patterns of integration post-acquisition can be accumulating, adaptive, non-adaptive and deteriorating depending on the sensemaking approaches used by the two sets of actors involved.

The article distances itself from the rational-functional international business perspective of the post-acquisition process and emphasizes rather the importance of intracorporate power and contestation in MNCs (Clark and Geppert Reference Clark and Geppert2011: 410). Thus organizational plurality, processes and politics are seen as significant factors in any explanations of MNC construction.

The approach adopted in the paper is open to further development such as an expansion of the range of actors included in an assessment of the post-acquisition process and an extension of the variety of different subsidiary identities since the research on which the article is based focused on brownfield sites in countries with very different institutional histories to the MNCs themselves.

Empirical focus

The focus of this article is the incorporation of power and interests into the analysis of the cross-border transfer of MNC practices. Power is understood in terms of the power capabilities of different multinational company actors, both in headquarters and the subsidiaries, to influence the institutional environment inside and outside the MNC in order to shape the transfer process in their own interests. MNCs are seen as political actors and the power of the actors is linked to the institutional context in which it is being exercised; thus the power capabilities of actors are shaped by the institutional context in which they operate.

The authors investigate the transfer of human resource and employment practices in the article since MNC headquarters actors often view them as important objects of transfer to protect corporate competitive capabilities, yet they are also strongly subject to host country influences. Power and interests are viewed as integral to relations between employers and employees in MNCs because the relationship between them is one of ‘structured antagonism’ (Ferner et al. Reference Ferner, Edwards and Tempel2012: 165).

The explanandum of the article are the outcomes of the process of transferring human resource and employment practices in MNCs, while the explanans are the different power capabilities and interests of the actors involved in this process. It is a conceptual paper which draws on examples of empirical findings in the literature about transfer processes to develop a framework which includes a range of different processes and the reasons behind them. The conceptual model developed comprises five scenarios, all with different outcomes: functional hybridization (high transfer), resistive hybridization (low transfer), failed transfer, ceremonial or ritual compliance and reverse transfer (from the subsidiary to MNC headquarters).

Theoretical focus

The paper reviews the neo-institutionalist approach to transfer of practices in MNCs, which focuses on rival isomorphic pressures from home and host countries in the MNC as well as the effects of institutional distance (Kostova Reference Kostova1999). However, Kostovian approaches fail to investigate the effects of power, coalitions, interests and competing value systems. Actors, the paper argues, are not only influenced by institutions as per the neo-institutionalist approach, but can also influence them in line with their power capabilities and interests.

The authors adopt both a systemic and episodic view of power. The global dynamics of capitalism are referred to in the paper and these are based on the exercise of agency by powerful actors in the economic and technological realm. As a result of this, organizations are susceptible to contestation. Certain MNCs play a more dominant role in this power process and exert influence across a range of dimensions including global, national, subnational and sector levels as well as within their own organizations. Thus MNCs can be rule makers as well as rule takers and are able to influence institutions in both the home and host countries in which they operate, exploiting gaps in institutional frameworks, for example, to assert their interests (Ferner et al. Reference Ferner, Edwards and Tempel2012: 169). In terms of the episodic perspective, the paper investigates instances of actual transfer of HR and employment practices in specific MNCs found in the academic literature. This is then used to develop a broad conceptual framework, which incorporates the power capabilities of different actors and the outcomes of this in terms of the actual transfer of practices in MNCs. Although the study focuses on key HQ and subsidiary actors, not marginalized actors as in the case of Blazejewski (Reference Blazejewski2009), these two sets of actors are not viewed as monolithic blocks and it is assumed that other actor groups may also be involved in influencing the transfer processes in practice.

In the authors’ view, the use of institutional profiles in assessing home and host country influences, as well as the institutional distance assessments found in Kostovian neo-institutionalist analyses, are too blunt an instrument to be able to accurately assess transfer processes and they suggest that researchers may need to look at a wider range of subnational levels in practice, which may be quite different to the overall national country profiles.

The power concept used in the paper is based on a Lukesian three dimensions of power perspective (Lukes Reference Lukes1975, Reference Lukes2005) and Hardy's (Reference Hardy1996) application of these dimensions to business issues. The three power dimensions used are: the power of resources, i.e. ability to control scarce resources, the power of processes, i.e. the power to control organizational processes and the power of meaning, i.e. which relates to power relations in the economic and technological realms. The power capabilities of headquarters- and subsidiary-level actors are then investigated as the key actors in transfer processes. While headquarters’ power is viewed as transcending context and therefore the greater, subsidiary actors have a lower contextual range of power, being dependent on the resources of the specific institutional setting of their subsidiary. However, although headquarters does usually have the key power resources, there is still scope for subsidiary challenges to this and a lot of contestation is possible in transfer processes.

Although the current paper is based on headquarters and subsidiary management actors in the transfer process, the authors suggest that further research may need to look at different groups within these two broad groupings, such as management and workforce actors in the subsidiary or, within subsidiary management, the operations and human resources (HR) managers. Skilled and unskilled workers may also have different interests and power resources which are brought into play during the transfer process with some actor groups supporting transfer whilst others resist it. Actor perception of their interests and the perceived ‘criticality’ to their interests of the practices being transferred will also influence the levels of resistance to or acceptance of change (Ferner et al. Reference Ferner, Edwards and Tempel2012: 177).

The conceptual model developed includes different constellations of institutional distance or modified institutional distance (mID) depending on the relative power of the MNC compared to the subsidiary and the different macro- and micro-level power capabilities and interests of the different actor groups involved in transfer as reflected in the three dimensions of power outlined earlier. Five typical scenarios based on the factors above are then investigated. These lead to five different outcomes in the transfer process between MNC headquarters and the subsidiaries: functional hybridization, where there is a successful transfer of practices from headquarters to the subsidiary, resistive hybridization, where there is low internalization of the practice being transferred, a failed transfer process, a ceremonial or ritual compliance and a reverse transfer process, where the headquarters adopts practices from the subsidiary itself.

The article provides a modification of the Kostovian approach to practice transfer processes in MNCs. While the proposed model includes familiar elements found in neo-institutionalist approaches to assessing transfer of practices in MNCs, such as institutional distance and macro- and microinstitutional factors, it also incorporates the interests and power capabilities of the different actors involved to explain the contestation which occurs in many instances. Interests and power can be both episodic and limited to the one instance of transfer, or systemic involving long-term durable interests such as survival of the organization for both HQ and subsidiary actors. The conceptual ideas developed, it is argued, now need to be further explored via in-depth case-studies of actual transfer processes between MNC headquarters and subsidiaries to assess the viability of the variables included in the model.

Empirical focus

The paper by Vaara et al. (Reference Vaara, Tienari, Piekkari and Säntti2005) is concerned with the role of power in language policy choices in multinational corporations (MNCs) that undergo a merger. While language has been a topic in organizational studies since the 1970s, the role of language in MNCs, i.e. the dominant organizational form for international business, has received very little attention. The study of language policy choices and the role of power therein is a relevant gap in research. Multiple languages (similar to multiple cultures or nationalities) inherently create tensions, especially in situations of cross-border mergers that juxtapose and confront parties that have different natural languages, while at the same time a need for a common corporate language emerges in order to safeguard the effective functioning of the merged company.

The paper empirically draws on a single revelatory case, that is the 1997 merger of the Finnish Merita Bank with the Swedish Nordbanken, the first case of a cross border merger of retail banks in Europe. Based on rich ethnographic material the focus of the study is on the selection of Swedish as the official corporate language and the ‘deeper level meaning’ (Vaara et al. Reference Vaara, Tienari, Piekkari and Säntti2005: 601) of this decision for actor power, power structures and conflict in the merged company. Power, politics and conflict are seen as central to explain language policy choices in merging MNCs and are an explanans to the organizational effects of such a choice.

Theoretical focus

The paper is rooted in post-colonial theory and its more recent application outside immediate colonial debates:

Conceptually the paper draws on Clegg's (Reference Clegg1989) ‘circuits of power’ framework in order to provide an integrated view on power, politics and conflict involved in language policy choices and forces of marginalization and exclusion triggered by language policy choices in MNCs. In line with Clegg's ‘circuits of power’ approach Vaara et al. (Reference Vaara, Tienari, Piekkari and Säntti2005) engage in three distinct levels of investigation in order to ‘illustrate the complex power implications of language policies’ (ibid.: 605). At the level of observable social interaction the paper details how language skills are empowering and disempowering resources that nationally confined groups of actors hold in the merger. At the level of identity and subjectivity construction the paper describes how the language policy decision is (re)constructing the identity and subjectivity of actor groups. At a final level the paper explores the reification of structures of domination through the language policy choice.

Underlying this analysis is an understanding of the multinational corporation as a natural system which however does not foreclose a certain functional rationality in decision making, as the authors argue:

This links up to the generic concept of politics applied by Vaara et al. (Reference Vaara, Tienari, Piekkari and Säntti2005), who are explicitly stressing the ‘inherently political nature of multinational corporations’ (ibid.: 621). Even though the paper deals with a particular episodic instance where actors apply available power resources to pursue their recognized interest, the overall concept of power applied is systemic as the authors rigorously trace structural antecedents for deeper level effects of the language policy choice (e.g. that this choice vitalizes historically constructed conceptions of superiority and inferiority and reifies structures of domination). The fact that, based on colonial history, Finns learn Swedish as their first language in school strongly informed the choice of Swedish as the corporate language of the merged company. This in itself then led to an exclusion of Finnish managers from certain positions, to a disempowering of their professional resources and to a feeling of professional incompetence. While hardly elaborating on the conflict dimension, the paper nevertheless discussed resistance strategies of Finnish managers such as: deliberately switching to English in official meetings, looking for career options in parts of the merged bank where Swedish was of no or of minor importance, or leaving the firm.

The paper is fairly differentiated when considering the actors involved and affected by the language policy choice in the case company. Restricted to managerial actors, the paper distinguishes several groups and subgroups of managers (e.g. Finnish and Swedish managers, top and middle manager, bilingual and Finnish managers with a weak command of Swedish, etc.) and discusses how the language policy choice affected their interests and power positions. This also informs the level of alignment between the organizational decision for Swedish as the corporate language and particular goals that can be found among several actors and groups. For instance, alignment to the decision for Swedish as corporate language was high with Swedish managers, but low for Finnish managers with a weak command of Swedish. As indicated above when discussing the different resistance strategies, actors are conceptualized as autonomous in their reactions to the language policy choice but they are seen as informed by their particular interests and contextual conditions. Here Vaara et al. (Reference Vaara, Tienari, Piekkari and Säntti2005) report a rich array of national, hierarchical, organizational, suborganizational and individual biographical contexts that inform the Swedish proficiency of managers, which is seen as indicative for the way the individuals are affected by the language policy choice. By the same token Swedish language proficiency is considered to be a basic means. Actors’ means–ends orientations, however, are not studied systematically.

Empirical focus

Frenkel's (Reference Frenkel2008) paper focuses on the cross-border transfer of knowledge and practice within MNCs and the way this is discussed in the mainstream international management discourse. The paper in particular refers to transfers between the first world and third world. Given the fact that the majority of large MNCs are from the first world, and a growing number of their foreign affiliates are located in the developing (third) world, the paper assumes that “the transfer and management of knowledge and practices is increasingly a matter of relations between dominating and dominated societies” (Frenkel Reference Frenkel2008: 925).

Consequently the knowledge transfer process is seen as embodying the unequal power relations between the dominating and the dominated forces in the contemporary world order ‘whether in relation to the colonial empires of the eighteenth and nineteenth centuries or in relation to today's superpowers and economic empires’ (Frenkel Reference Frenkel2008: 925). This makes geopolitical power relations into a central element (explanans) to explain political maneuvering and conflict associated with knowledge transfer processes (explanandum).

Theoretical focus

The paper draws heavily on post-colonial theory both as a critique to the mainstream management discourse on knowledge transfer in MNCs and as a source for a new multilevel research programme that overcomes the aforementioned critique.

Following Frenkel (Reference Frenkel2008), a post-colonial reading of the mainstream management discourse on knowledge transfer in MNCs uncovers that mainstream contributions: (i) are excluding and silencing organizational knowledge from the third world; (ii) are representing the third world in an over simplistic way; and (iii) falsely link transfer failures to the third world affiliates’ missing cultural and institutional capacities (Frenkel Reference Frenkel2008: 925, 930). Drawing on Homi Bhabha's (Reference Bhabha1994) epistemology of ‘mimicry, hybridity, and the third space’, the paper presents an alternative understanding and a new multilevel approach to study knowledge transfer in terms of forces. ‘Mimicry’ is understood as a control practice in which the colonizer (the first world MNC) forces the colonized to mimic the colonizers knowledge. This is accompanied by a discourse that mimicry is for the colonized's own good as the knowledge from the colonizer is superior. ‘Hybridity’ refers to the impact that knowledge and practice transfers have on the reformulation of national identities and cultural beliefs in recipient countries. This not only includes colonizers’ domination but also resistance of the colonized. What emerges is a ‘third space of in-between’ in which the ‘cutting edge of translation and negotiation’ (Bhabha Reference Bhabha1994, cited according to Frenkel Reference Frenkel2008: 928) occurs between the colonizer and the colonized.

In Frenkel's (Reference Frenkel2008) view, MNCs are concrete examples of such a ‘third space of in-between’. Here ‘politicize[d] knowledge production’ (ibid.: 937) takes place through a contested and power-laden process in which the colonizers and the colonized interact and mix with one another. It is here where mutual perceptions as well as the manner by which perception shapes the process of knowledge transfer and implementation surface. This clearly highlights Frenkel's (Reference Frenkel2008) – respectively Bhabha's – understanding that MNCs are natural systems, in which political maneuvering is generic and constitutive to organizational life. The power of MNC actors in such a politicized knowledge production is systemically confined by unequal geopolitical power relations and associated conceptions/perceptions of nationhood and culture, that tend to be reproduced though the content of knowledge that is transferred in MNCs, i.e. knowledge from the first world (Frenkel Reference Frenkel2008: 929). Although the paper does not delve into the issue of conflict, the paper maintains that the transfer of knowledge and practices in MNCs needs to be seen ‘as a process occurring in a conflict-ridden context’ (Frenkel Reference Frenkel2008: 937) where conflict emerges when subaltern actors resist imposed knowledge and practices (Frenkel Reference Frenkel2008: 927, 936).

According to Frenkel (Reference Frenkel2008) subaltern actors in processes of knowledge and practice transfers are managers and workers in third world affiliates of MNCs, as well as third world affiliates of MNCs as such. The MNC headquarters is considered to be the dominating actor, whose objective or subjective understanding of the MNC's needs defines what is to be transferred, and thereby incorporates and perpetuates the foreign units’ dependence on the headquarters (Frenkel Reference Frenkel2008: 929, 931). Actors are typically characterized as contextually determined, with the geopolitical position of the country they stem from (either from the first or the third world) framing their behaviour. Bounded rationality is assumed for all actors, but in particular elaborated for local subsidiary managers whose behaviour might vary according to: (i) their identification with the local unit; (ii) previous training in the headquarters; and (iii) situational political circumstances (Frenkel Reference Frenkel2008: 936). The paper does not explicitly discuss sources of actor power. As it transpires from the paper, however, headquarters’ power is largely conceptualized as hierarchical power, the power to shape discourses on superiority and inferiority of knowledge and practices and as the power to influence the reformulation of national identities and cultural beliefs through the transfer of knowledge and practices. Local actors’ sources of power are only broadly characterized by their potential to resist such transfers. Actors are seen as actively enacting their contextual conditions (be they national, individual, and/or discursive) thereby having an influence both on the sedimentation or the alleviation of unequal relationships within the MNC and beyond.

Empirical focus

The paper by Böhm et al. (Reference Böhm, Spicer and Fleming2008) is concerned with a better understanding of how international business is resisted. In particular, it zooms in on what has been labelled by Scott (Reference Scott1990) as ‘infra-politics’, i.e. the informal and clandestine ways to challenge international business that have so far been largely neglected in academic debates. This encompasses a large number of practices including workplace misbehaviour, guerrilla action and direct action protests (Böhm et al. Reference Böhm, Spicer and Fleming2008: 174).

In addition to further elucidating these decentralized, non-hierarchical, grassroots resistance activities, Böhm et al. (Reference Böhm, Spicer and Fleming2008) strike a link between informal and formal forms of resistance, with the latter including state, union and non-governmental organization (NGO) resistance to international business. Here the paper goes beyond describing and classifying different forms of resistance by taking a conceptually informed account of how different types of resistance combine and interconnect in order to articulate counter-hegemonic discourses (Böhm et al. Reference Böhm, Spicer and Fleming2008: 170).

Theoretical focus

Theoretically the paper builds on Gramsci's (Reference Gramsci1971) concept of hegemony. This concept highlights that the domination of one social group over another not only occurs in one social sphere such as the economy but also in the other social spheres including the state and civil society. Thereby a hegemonic regime is vitally dependent on the construction of consent structures throughout the spheres, with resistance to hegemony then leading to latent or manifest conflicts in all spheres. Following Böhm et al. (Reference Böhm, Spicer and Fleming2008) multinational companies today dominate all spheres and generically provoke resistance as they are embedded in multiple antagonistic power relations. Hence Böhm et al. (Reference Böhm, Spicer and Fleming2008) conceptualize multinational companies as natural systems that are internally shaped by the capital–labour divide and externally by antagonistic relationships with state and civil society actors. In line with Gramsci's concept of hegemony, the paper further assumes that power is systemic, with MNCs seen as trying to forge their hegemony in cultural and institutional norms. As an example the paper here refers to MNCs’ billboard and TV advertisements as well as movie production that aim to control ‘signs, signification and meaning’ (Böhm et al. Reference Böhm, Spicer and Fleming2008: 174).

Overall the paper takes a rather comprehensive actor perspective with all actors being described as trying to proactively shape their environments. Within the MNC, the paper conceptualizes the capital side as a unified rational actor (with no differences between the owner and managers) that aims to safeguard profitability and hegemony, whereas workers and trade unions are seen as bounded in their rationality as their resistance is largely seen as confined by the MNC strategies and their negative outcomes such as bad working conditions, environmental pollution, low pay, weak labour representation, etc. Actors outside the MNC considered encompass governmental and civil society actors that similarly are assumed to resist MNC strategies when they conflict with their particular interests or worldviews.

The paper highlights that those actors resisting MNC strategies use formal and informal modes of protest, with ‘formal resistance strategies…always accompanied and supplemented by informal, infra-political forms of resistance’(Böhm et al. Reference Böhm, Spicer and Fleming2008: 175). This is seen as opening up opportunities to overcome ‘egoistical acts’ of resistance (Böhm et al. Reference Böhm, Spicer and Fleming2008: 179) by individual power holders and to actively engineer counter-hegemonic discourses that enhance the power of the resisting actors. Within MNCs, formal resistance extends to traditional trade union activities such as ‘strikes, go-slows or demands for increased salaries’ (Böhm et al. Reference Böhm, Spicer and Fleming2008: 175). This is supplemented by informal means to resist and undermine managerial practices such as ‘sabotage, theft, cynicism and absenteeism’ (ibid.: 175). Formal state resistance to MNC strategies includes the creation of a regulatory framework that governs MNCs’ activities as well as nationalization policies (in some cases). Informal state resistance refers to the policies of ‘non-bureaucratized political groups or networks that try to influence state policy (e.g. the Zapatista movement in Mexico). Finally, formal means of civil society resistance extend to bureaucratized NGOs’ strategies to watch and to politicize the more problematic practices of MNCs such as human rights violations with the aim of creating public consciousness. Informal means mentioned here are swiftly organized direct actions by social movements such as the activities of the anti-globalization movement in response to World Trade Organization (WTO) or International Monetary Fund (IMF) meetings.

Overall, actors’ resistance behaviour seems to be driven by actors’ goals as well as by the particular power position of the actor and the means that are available in the actor context. The most relevant context for resisting actors following Böhm et al. (Reference Böhm, Spicer and Fleming2008) is the sphere an actor is located in (economy/firm, state or civil society) as well the organizational form actors have taken on (formal vs. informal organizations).

Empirical focus

The empirical focus of this paper is the relationship between transnational capital and national and transnational labour unionism in the context of a capitalist neo-liberal conceptualization of globalization. The authors draw primarily on European examples of transnational unionism ‘because the EU has the most developed regulatory spaces and processes of transnational union regulation’ (Lillie and Martínez Lucio Reference Lillie and Martínez Lucio2012: 75). Transnational capital is embodied in TNCs or MNCs: transnational labour organizations include the International Confederation of Free Trade Unions (ICFTU) and the industry-defined Global Union Federations (GUFs). At a European level these are replicated by the European Trade Union Confederation (ETUC) and European Industry Federations (EIFs).

Such transnational labour organizations are based on national structures of representation with most activity occurring through informal networks of cooperation between independent organizations. Hence:

It is argued that the mobility of capital, or indeed the mere threat of such mobility, undermines the bargaining power of national trade unions and states. Although transnational labour unionism offers potential to redress the balance between capital and labour, ‘the network structure of transnational labour unionism, in formal and informal terms, is in itself an ineffective response to capitalist globalization, and the narrative of global competition’ (Lillie and Martínez Lucio Reference Lillie and Martínez Lucio2012: 75).

Transnational trade union organizations, formed through networks, have much less scope for formal centralized control than their nationally based counterparts. They are unable to adopt the same hierarchical control structures as those employed by MNCs. Consequently the ability of transnational trade union organizations to facilitate unified resistance to transnational capital is weak and remains dependent on loose networks in which diverse interests are prone to undermine united action.

In this paper power is placed centre stage as a systemic feature of the socio-economic conditions of contemporary capitalism. The dominant narrative of globalization which promotes competition as the driving force for economic progress (explanans) explains the power exercised by transnational capital over nationally based labour unions and states (explanandum). Following on from this, the mobility of capital together with the geographical fragmentation of labour (explanans) explains the inadequacy of organized labour to counterbalance capital at a transnational level (explanandum).

Theoretical focus

This paper is firmly embedded in the Marxist tradition of class conflict. For instance, Lillie and Martínez Lucio (Reference Lillie and Martínez Lucio2012) argue that:

The authors draw on literature from international industrial relations to support their argument that if labour organizations are to resist transnational capital they require more systematic and structured transnational trade unions or new forms of networking as well as the construction of a convincing counter narrative to that of global competition.

Lillie and Martínez Lucio (Reference Lillie and Martínez Lucio2012) point to the irony of transnational capital's exploitation of globalization, through, for instance, forcing concessions from labour, depending on the continued construction of difference. Hence, globalization does not lead to homogenization but rather it creates difference so that local actors and spaces can be played off against each other.

Transnational capital is viewed as a rational united actor driven by the search for profit. In contrast, labour is seen as context dependent, with its rationality bounded by the dominant capitalist narrative of global competition. The hegemony of capital, though resisted at national levels by trade unions and national regulatory frameworks, is free from serious contestation at the global level where the mobility of transnational capital undermines efforts to provide unified transnational labour resistance.

Lillie and Martínez Lucio (Reference Lillie and Martínez Lucio2012) suggest that the relationship between transnational capital and labour is much the same as the relationship between TNCs and the masses depicted in the 1975 film Rollerball, directed by Norman Jewison. In the dystopian future portrayed in this film, TNCs rule the world and promote the violent game of ‘rollerball’ to create the illusion of competition and maintain difference in loyalties among the masses.