Strategic and tactical political aspects of discursive sensemaking

Strategic and tactical political elements of sensegiving are the focus of current studies on M&As, which raise questions about how actors made and gave sense about the purpose and internal and external legitimacy of mergers. A key finding is that dialogue and discursive sensemaking can become highly politicized over time in post-merger integration situations. The latter problem has been related to key actors’ perceptions of the equality, synergies and justice of the merger.

Vaara and Monin (Reference Vaara and Monin2010), for instance, analyse the case of a failed merger in the pharmaceutical industry in France. A key focus of the study is the ‘political nature’ of legitimation and ‘the risk associated with politicization’ of the merger sites. Sensegiving is seen as a central element of the discursive legitimation of the merger which promotes a specific way of thinking and taking action. The authors especially show how manipulative acts of sensegiving by the top management team (TMT), which is responsible for managing the merger site, led to an increased politicization over time. They refer to these kinds of tactics as sensehiding in the paper and concentrate their analysis on the question of how and why particular ideas and the true motives behind the merger remain hidden (ibid.: 6). The authors provide dense empirical evidence for the tactics of sensehiding, e.g. by showing that the three strategic goals, which were provided in the initial press release to justify the merger to internal and external stakeholders, were successively reduced to only one motive in later press releases (ibid.: 13). This kind of intentional manipulative tactic blocked any serious dialogue about the potential synergies between the two merged sites and about effective solutions when the merger faced a ‘legitimacy crisis’. The study concludes that ‘hiding’ the true motives of the merger not only explains the increased politicization of discursive sensemaking but also why the merger faced a serious ‘legitimacy crisis’ which led to its failure in the end.

Another study by Monin et al. (Reference Monin, Noorderhaven, Vaara and Kroon2013) provides an even more comprehensive view of discursive sensemaking by pointing to both the political elements of sensegiving within TMT and sensemaking by lower-level managers and employees. The authors distinguish altogether three forms of sensegiving – in reference to the changing perceptions of the members of TMT with regard to the ‘distributive justice’ of the post-merger – and three forms of sensemaking – in reference to the changing perceptions of lower-level managers and employees with regard to the ‘distributive justice’ of the post-merger:

• sensegiving as ‘sensebreaking’, i.e. ‘breaking previously established senses of justice’;

• sensegiving as ‘sensehiding’, i.e. ‘deliberately avoiding particular senses of justice’;

• sensegiving as ‘sense specification’, i.e. ‘providing specific meanings of justice’;

• sensemaking as ‘acceptance of specific senses of justice’;

• sensemaking as ‘resistance to senses of justice’;

• sensemaking as taking ‘distance from senses of justice’ (ibid.: 257).

The research shows two important political aspects of sensegiving: on the one hand, as in the former study by Vaara and Monin (Reference Vaara and Monin2010), the importance of sensehiding as manipulative sensegiving tactics is emphasized. It is shown how alternative senses and voices with regard to ‘distributive justice’ in the process of post-merger integration were ‘silenced’ and ‘marginalised’ (ibid.: 262). On the other hand, the strategic role of powerful key actors, like TMT, is stressed by showing how it played the role of a dominant force in the early stages of post-merger integration when sensegiving activities were undertaken, which were intended to ‘break’ the established ‘ways of thinking’ with regard to the equality and justice of the merger. Sensebreaking has been seen as a ‘concrete rule-breaking’ act (ibid.: 261).

Complementary attention is also paid to the political sensemaking tactics of lower-level managers and employees in response to the sensegiving acts of TMT. This is associated with active forms of resistance, where, e.g. a manager openly opposed the ‘sensehiding’ approach of TMT by referring to the merger not as a ‘merger of equals’ but as a ‘take-over’, a phrase which was not supposed to be officially used and thus was ‘taboo’. On the other hand, the study also points to passive forms sensemaking like the ‘distancing’ of lower-level managers by their ‘expressing distrust and negativity’ with regard to the official interpretations of post-merger equality and justice expressed in the sensegiving acts of TMT (ibid.: 263).

In short, the study shows not just the socio-political importance of tactical sensehiding approaches but also the crucial strategic role of sensebreaking, which was deliberately used to systematically change the norms of justice in the post-merger site from ‘equality to equity’ (ibid.). The study especially points to the critical role of sensegiving acts in comparison to sensemaking acts, where the resistance and distancing tactics of lower-level managers and employees led to some dialogue but remained confined to the operational level and had little impact on the strategic direction of the overall sensegiving approach by senior management.

A central question for future research is, however, in how far concepts and findings related to specific post-merger situations can be applied to other critical events involving political sensemaking in MNCs such as mandate changes, corporate restructuring and closures. Moreover, different societal contexts of sensebreaking and sensehiding acts, such as the country of origin of the MNC and host country institutional features like labour law and industrial relations, have not been taken into consideration. We will come back to these questions at the end of this chapter, when we more systematically look into possible directions for future research.

Self-censoring and inaction in discursive sensemaking at subsidiary level

The stream of research on discursive sensemaking discussed above concentrates largely on the power of top management who intends both to deliberately change the ‘rules of game’ through sensebreaking activities and, based on more indirect and manipulative sensehiding tactics, to impose certain ‘rules of the game’ and dominate dialogues in the MNC. In contrast to these studies, but also highlighting the crucial role of ‘authority-imposed’ forms of sensegiving, is another way of studying the political dimensions of discursive sensemaking by taking a bottom-up view. This was the focus of Whittle et al. (forthcoming) which sheds some light on the dark side of MNC power relations and forms of dominance in MNCs by analysing ‘why particular senses, ideas and voices are never actually “heard” or “shared” due to anticipatory, self-imposed censoring’ at subsidiary level (ibid.). It is stressed that political sensemaking might not necessarily always lead to open conflicts and power struggles by pointing to situations where subsidiary managers develop strong interests to ‘hide, dilute or restrict their “local sense” from the headquarters, including their knowledge of the local market and their preferred strategic direction for the firm’ (ibid.). Whittle et al. call these tactical elements of political sensemaking ‘sense-censoring’. A main contribution of the study is to show how and why ‘sense-censoring’ transforms strategic action into inaction. A key reason provided for this inaction are managers’ past experiences of political struggles with headquarters. In stories told by them these struggles are mainly framed as lost battles, in which headquarters is referred to as an ‘elephant’ and the local subsidiary as an ‘ant’.

When addressing these questions the researchers point to an important conceptual problem of mainstream international business studies on power and politics which are based on resource dependency theory. Here it is assumed that subsidiaries that show strong economic performance and have a solid local knowledge base will be in a strong bargaining position in negotiations with the headquarters (see e.g. Birkinshaw Reference Birkinshaw2000). The case studied by Whittle et al., a UK subsidiary of a large US MNC, ticked all the boxes for the structural features of a powerful subsidiary in terms of resource dependency theory. The firm behaved, however, very differently from expected. It was found that the self-perceptions of UK subsidiary managers did not match the subsidiary's structural position within the MNC but featured instead the position of a ‘strategic dependant’ (Clark and Geppert Reference Clark and Geppert2011). These perceptions of being in a weak bargaining position were treated by local managers as ‘social facts’ and therefore they did not materialize in recursive cycles of political sensemaking and sensegiving as emphasized in other studies (Clark and Geppert Reference Clark and Geppert2011; Monin et al. Reference Monin, Noorderhaven, Vaara and Kroon2013).

What Whittle et al. (forthcoming) point to is the role of self-imposed passivity in discursive sensemaking at subsidiary level, where managers in their case study increasingly relied on sense-censoring which led to their inaction in terms of ‘issue selling’ (Gammelgaard Reference Gammelgaard2009) and political bargaining (Birkinshaw et al. 2001). Perceptions of headquarters’ domination and self-perceptions of a weak subsidiary position led to submissive behaviour, where subsidiary key actors were ‘fearful of putting their “heads above the parapet”’ (Whittle et al. forthcoming). The specific forms of political sensemaking discussed here cannot be captured by mainstream functionalist power concepts which remain on the episodic surface of the ‘language games’ played in organizations (see also Clegg et al. Reference Clegg, Courpasson and Phillips2006). Discursive acts of sense-censoring and inaction point to the deeper and darker sides of MNC power relations in which actors accept the established ‘rules of the game’; dominant power structures are taken for granted and turned into social facts in discursive sensemaking acts, which lead to the perception that ‘there is no alternative’ (the TINA effect). In short, in certain situational contexts, political sensemaking tends to manifest the established authority of the headquarters, based on strong beliefs at subsidiary level that ‘resistance is useless’ (Royle Reference Royle, Geppert, Matten and Williams2002), ‘dangerous or counterproductive’ (Whittle et al. forthcoming). This kind of political dynamics of discursive sensemaking leads to self-censoring and inaction at subsidiary level.

A vital question, however, is whether there are situational contexts in which the emergence of self-censoring and inaction of subsidiary management is more likely. From this point of view we need, for example, to ask how far the findings of this specific case study – of an MNC originating from a liberal market economy context, the US, which also operates in a liberal market economy host context, the UK – are relevant for MNCs originating from and operating in non-liberal market economies. Moreover, there might be differences between industrial sectors (Geppert and Hollinshead Reference Geppert and Hollinshead2014) in terms of power relations and the dominance of MNC headquarters, which make self-censoring-related inaction more likely in some sectors than in others.

Challenges and new directions for future research

We have shown that there is a growing body of discursive sensemaking studies which deal with novel aspects of power and politics in the MNC. We have especially concentrated on research pointing to the vital role of sensegiving strategies and tactics and also on political sensemaking processes that lead to passivity and the silencing of subsidiary voices. With reference to these arguments and empirical findings, we see at least two challenges and directions for future research on discursive sensemaking.

The role of the situational context

Research on sensebreaking and especially sensehiding has so far been primarily developed in the specific situational context of post-merger integration and has not been tested in other critical events which are seen as triggers for political sensemaking like e.g. mandate change (Dörrenbächer and Geppert Reference Dörrenbächer and Geppert2009), MNC restructuring (Taplin Reference Taplin2006), shutdowns (Contu et al. Reference Contu, Palpacuer and Balas2013) or knowledge transfer from headquarters to subsidiaries (Kostova Reference Kostova1999). The questions emerging here are whether sensebreaking, which has been seen as especially relevant in the initial stages of post-merger integration (Monin et al. Reference Monin, Noorderhaven, Vaara and Kroon2013), will be as prominent and carry the same strategic importance in other situational contexts and if so, why and how? It needs also to be asked whether sensegiving in post-merger cases always involves sensebreaking. If so, the latter might trigger battlefield scenarios à la Kristensen and Zeitlin (Reference Kristensen, Zeitlin, Morgan, Kristensen and Whitley2001) which would undermine any serious post-merger integration approaches from the start.

The most interesting construct which needs to be examined much more systematically in other situational contexts is sensehiding. This might be an important tactical approach of headquarters when making sense and giving sense in reference to various political approaches of subsidiary managers, such as politicking and issue selling which we will also discuss further in Chapter 10. We might find very different political sensemaking dynamics in the various influence tactics listed in Table 10.1, when the headquarters sensegiving approach is more based on sensehiding by not revealing the underlying interests and goals in situations of mandate change negotiations when e.g. compared to corporate restructuring. Emerging questions for future research are: in which other situational contexts of discursive sensemaking does sensehiding play a similar important role as in post-merger integration situations, and are there host country contexts which make the use of sensehiding approaches more difficult, because of national institutional influences such as legal obligations and trade union and workers’ representatives’ rights, which require more open dialogue and negotiation?

The latter questions would also apply in the case of sense-censoring and inaction in subsidiary–headquarters relationships. The case-study analysed by Whittle et al. is a subsidiary situated in the liberal UK host market, where an expected strong strategic bargaining position of a subsidiary is more likely to be perceived as weak because wider societal resources for robust tool-building by local managers and representatives are missing (Williams and Geppert Reference Williams, Geppert, Dörrenbächer and Geppert2011). Situational contexts which provide weak incentives for tool- and coalition-building of local management with labour, are more likely to trigger a downward sense-censoring cycle in discursive sensemaking. Accordingly, we need to ask whether there are national and regional institutional contexts which make the appearance of self-censoring approaches less likely. More international comparisons of sense-hiding and sense-censoring approaches across diverse societal contexts are missing in the academic research so far and therefore provide interesting new routes for future studies of the political dimensions of discursive sensegiving and sensemaking.

Influence tactics

Research on influence tactics goes back to the 1970s with Allen et al. (Reference Allen, Madison, Porter, Renwick and Mayes1979) breaking ground by specifying a list of ‘organizational politics tactics’. The term ‘influence tactics’ then first appeared in an exploratory study of Kipnis et al. (Reference Kipnis, Schmidt and Wilkinson1980) that aimed to measure categories of influence behaviour and reasons for making influence attempts in organizations. Following Pfeffer (Reference Pfeffer1981: 137) influence tactics can be defined as a means to acquire power through the exercise of power in organizations. Over the next two decades a number of studies (e.g. Ansari Reference Ansari1990; Yukl and Falbe Reference Yukl and Falbe1990; Ferris et al. Reference Ferris, Hochwarter, Douglas, Blass, Kolodinsky and Treadway2002) used, refined and extended the list of influence tactics. Summarizing these works, an impressive reservoir of influence tactics, shortly described in Table 10.1 becomes visible.

This early research on influence tactics was also looking into the direction in which influence tactics are used, revealing strong differences among tactics, with for instance ‘rational persuasion’ widely used in all directions, ‘pressure’ mostly used downward and ‘coalition building’ mostly used laterally in the organization. On a more general account Yukl and Tracey (Reference Yukl and Tracey1992) proposed that the particular use of influence tactics is defined by five interrelated factors: ‘(1) consistency with prevailing social norms and role expectations; (2) agent possession of an appropriate power base for the use of the tactic in that context; (3) appropriateness for the objective of the influence attempt; (4) level of target resistance encountered or anticipated; and (5) costs of using the tactic in relation to likely benefits’ (Yukl and Tracey Reference Yukl and Tracey1992: 526). Early research on influence tactics also grouped them into hard and soft tactics. Hard tactics such as ‘legitimating’, ‘assertiveness’ or ‘blocking’ leave individuals less freedom to react and threaten or induce targets to comply, whereas soft tactics such as ‘consultation’, ‘inspirational appeals’ or ‘rational persuasion’ try to attract and co-opt targets. Although each tactic was found to be effective in an appropriate situation, Falbe and Yukl (Reference Falbe and Yukl1992) empirically showed that soft tactics were generally more effective than hard tactics. More recent research on influence tactics can be grouped into four streams.

A first stream of research looked at the relationship between individual actor characteristics and the use of influence tactics. Vredenburgh and Shea-VanFossen (Reference Vredenburgh and Shea-VanFossen2010), for instance, proposed that selected individual attributes such as aggressiveness, need for status or narcisism combined with particular organizational conditions (uncertainty, resource scarity, conflict) suggest specific political behaviours (e.g. forming informal coalitions, hoarding resources or installing dependency). Later, Barbuto et al. (Reference Barbuto, Fritz, Matkin and Marx2007) looked at the relationship between gender, age, and educational background of leaders and their use of influence tactics, with gender and education catering for significant differences in the use of influence tactics.

A second stream of more recent research on influence tactics looked at particular situations in organizations. For instance Bennenbroek, Gravenhorst and Boonstra (Reference Bennebroek Gravenhorst and Boonstra1998) studying the use of influence tactics in constructive change processes (i.e. far reaching organizational change with discernible consequences for the organizations’ individuals, strategy, structure and culture) found that ‘rational persuasion’, ‘consultation’ and ‘inspirational appeals’ are most often used. Another example is the study by Lines (Reference Lines2007) who looked at situations of strategy implementation and the role of influence tactics.

A third stream of research analysed the use of influence tactics in different types of organizations. Wadsworth and Blanchard (Reference Wadsworth and Blanchard2015), for instance, studied influence tactics in virtual organizations where interaction is computer-mediated instead of face to face. A main finding of their study is that there is a tendency to use harder, i.e. more assertive, tactics in virtual organizations than in face-to-face environments. Janneck and Staar (Reference Janneck and Staar2010) studied influence tactics in virtual interorganizational networks, where work does not only span over time and space but also over legal organizational boundaries. Going beyond seminal intraorganizational tactics they identified three additional influence tactics for interorganizational networks: (i) ‘mediating’ (gaining influence from taking a neutral position in a conflict); (ii) ‘being visible’ (frequent tactical use of the virtual networks’ communication channels and tools to demonstrate activity); and (iii) ‘claiming vacancies’ (voluntarily taking over tasks and roles such as moderating meetings or administrating IT platforms to gain influence).

Finally, more recent research was also concerned with national differences in the use of influence tactics. An example is Fu and Yukl's (Reference Fu and Yukl2000) comparative study on the use of influence tactics in US and Chinese firms. This study found that American managers perceived ‘rational persuasion’ and ‘exchange’ as being more effective than Chinese managers did, whereas Chinese managers found ‘coalition tactics’ and ‘upward appeals’ more effective than American managers did. Despite the fact that respondents were sampled from an American and a Chinese subsidiary of the same multinational corporation (plus a replication sample made up by managers of a number of genuine American and Chinese companies) the study exclusively focused on the use of upward, downward and lateral influence tactics within the respective national subsidiary. Thus the specifics of the cross-border use of influence tactics were not addressed. In addition the incidences American and Chinese managers were asked to rate influence tactics for were of personal career matters as well as of minor operational issues within the subsidiary. Strategic issues that refer to the subsidiary as a whole and that involve headquarters’ consent were not asked for. These limitations, that also apply to a later study of Fu et al. (Reference Fu, Kennedy, Tata, Yukl, Bond, Peng and Cheosakul2004) involving twelve countries, however, are a least partially dealt with in the literature on issue selling in multinational corporations, which we present next.

Issue selling in multinational corporations

Influence tactics that refer to broader strategic issues have been discussed under the label of ‘issue selling’. Dutton and Ashford (Reference Dutton and Ashford1993) define issue selling as the ‘individual's behaviours that are directed towards affecting others’ attention to and understanding of issues’ (ibid., p. 398), with issues seen as strategic events or developments that have implications for organizational performance.

Following Dutton and Ashford (Reference Dutton and Ashford1993), issue selling involves two distinct activities: issue packaging and the process of selling the issue.

1. (i) Issue packaging involves, first, the way the content of the issue is framed and bundled. Second, issue packaging also involves decisions about the way the issue is presented (e.g. as something dramatically new) and what persuasion tactic is used (making one- or two-sided arguments).

2. (ii) The issue selling process then is about lobbying for an issue. It involves decisions about the breath of involvement (going solo or building coalitions) as well as about the channels (e.g. regular strategy meetings) and the formality of how upper levels of the organizational hierarchy are approached regarding the issue.

While Dutton and Ashford (Reference Dutton and Ashford1993) develop a generic model of how middle managers sell strategic issues to top managers in organizations touching upon a broad number of influence tactics set out by the influence tactics literature (see Table 10.1), they – similar to the influence tactics literature – do not emphasize such activities in multinational corporations, where attempts to sell issues or take influence occur across borders and involve headquarters and subsidiaries. There are only a very few studies so far that have taken on this perspective. Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008a) maintain that in order to be successful in issue selling ‘a subsidiary not only needs to maintain a basic track record of success, but also needs to reaffirm its commitment to the parent's objectives; and then, finally, it needs to take deliberate steps to manage impressions with power brokers at the head office’ (594). In another paper, Bouquet and Birkinshaw (Reference Bouquet and Birkinshaw2008b) substantially enlarge their list of means and tactics subsidiaries low power actors have at hand in order to gain influence in an MNC. Some of them challenge the status quo of the MNC. This includes ‘taking initiatives’, ‘breaking the rules’ and ‘building profiles’. Others relate to political games played in MNCs. Here one can distinguish between individual means of influence such as ‘deference’ or ‘co-opetition’ and collective modes of action such as ‘representation’, ‘building coalitions’ and ‘seeking feedback’. Focusing on reactive tactics subsidiaries apply when resisting unwanted headquarters initiatives, Schotter and Beamish (Reference Schotter, Beamish, Dörrenbächer and Geppert2011) identified the following tactics: ‘ignoring’, ‘shifting emphasis’, ‘ceremonial adoption’, ‘obstructing and attacking’.

Going beyond a phenomenology of subsidiary means and tactics in issue selling, Ling et al. (Reference Ling, Floyd and Baldridge2005) propose that subsidiary managers socialized in different cultures (collectivistic vs. individualistic, high vs. low status identity and ambiguity tolerance cultures) vary according to their choice of issue selling tactics with e.g. managers from collectivistic countries more likely to use ‘coalition tactics’ than managers from individualistic countries. Drawing on the subsidiary staffing literature, Gammelgaard (Reference Gammelgaard2009) shows that subsidiaries managed by expatriates more effectively apply issue selling tactics vis-à-vis headquarters than local managers in order to enlarge the strategic mandates of their subsidiary. Finally, Dörrenbächer and Gammelgaard (forthcoming) look into the impact the MNC size as well as headquarters–subsidiary power relations have on the use of issue selling tactics.

New directions for research

Summing up previous research on influence tactics and issue selling, it turns out that there is a substantial body of literature on politicking in organizations. However this literature hardly applies to multinational corporations, and where it does, it is based on concepts that do not cater for the specifics of multinational corporations. Both the influence tactics literature as well as the original works on issue selling assume that actors seek influence in nationally uniform co-located organizations. Therefore, there is first and foremost a strong need for a thorough conceptual foundation of research on politicking in multinational corporations. Such a concept would need to systematically incorporate features that distinguish multinational corporations from national corporations, including country-of-origin and host country effects, differences in multinationality, the headquarters–subsidiary divide, geographic, psychic and cultural distance, corporate language and the fact that an MNC is a hierarchy, and therefore power is asymmetrically distributed among different legal units of the organization. What could be expected is that such conceptual groundwork might reveal more systematically new, more refined and more suitable categories of influence or issue selling tactics in multinational corporations. Here conceptual research can also draw on some more recent case-based research that has tentatively described some MNC-specific tactics such as capitalizing on headquarters’ insecurity zones (Dörrenbächer and Gammelgaard Reference Dörrenbächer and Gammelgaard2011) or shifting emphasis through translation (Logemann and Piekkari Reference Logemann and Piekkari2015).

A second new direction for further research calls for a more systematic evaluation of the use of influence tactics in multinational corporations. Given the rather piecemeal state-of-the-art on politicking in MNCs it is not surprising that the literature so far is mostly explorative in nature. Two aims have been followed here so far and need to be complemented by further research:

1. (i) Many efforts went into detecting, describing and building up a phenomenology of influence tactics. Given the fact that so far most research has taken a subsidiary perspective with a considerable number of papers addressing active political manoeuvring in the case of subsidiary initiative taking, there is room for more explorative case-based research both on defensive tactics of subsidiary managers as well as in general on headquarters managers’ use of tactics (e.g. regarding subsidiary suboptimizing behaviour). Also some more recently described offensive subsidiary tactics such as discourse building (Koveshnikov et al. forthcoming) need further attention through qualitative research. Going beyond individual tactics, more research is also needed to theoretically categorize influence tactics in order to make them more accessible for empirical research. Categorizations might follow traditional lines such as hard vs. soft tactics, offensive vs. defensive tactics and more cautious vs. daring tactics. However, tactics might also be grouped according to MNC characteristics (e.g. tactics mostly used by subsidiary managers vs. tactics used by headquarters’ managers, tactics used within vs. tactics used across borders). Also Dutton and Ashford's (Reference Dutton and Ashford1993) original framework of tactics for packing an issue and tactics for the selling process could be considered.

2. (ii) Only a few papers have made an attempt to generate hypotheses on the use of influence tactics in MNCs (e.g. Ling et al. Reference Ling, Floyd and Baldridge2005). While this is helpful, empirical investigations based on these hypotheses are still missing. In addition, given the many features MNCs harbour, there is ample room to develop hypotheses beyond the impact of cultural differences, as put forward by the research of Ling et al. (Reference Ling, Floyd and Baldridge2005). For instance the link between a subsidiary manager's use of tactics and various subsidiary properties such as subsidiary role, subsidiary size and subsidiary power and autonomy could be theorized. Another idea is to explore the impact national laws and regulations have on the use of influence tactics. For instance, while gift-giving ingratiation and exchange strategies might be a viable option in some countries they are an illegal no-go tactic in other countries.

A third new direction for research on politicking in MNCs zooms in on performative aspects of politicking that are hardly studied so far. Following Gammelgaard (Reference Gammelgaard2009), expatriate subsidiary managers are more effective in selling issues to headquarters, but are there downsides to it in terms of seeking influence within the subsidiary, and how important are these downsides? Next, what are the personal characteristics of effective political actors in the international environment of an MNC? In particular, what role does language command, a binational or a bicultural personal background and different types of national and international experience (in- or outside the MNC, in the MNCs’ headquarters, in foreign subsidiaries) play? Linked to that, another interesting aspect to study would be the relationship between (different types of) MNC managers’ career aspirations and their use of influence tactics. Do strongly career-minded managers use more daring or more cautious influence tactics or a specific combination of both? Are the tactics these managers use directed more towards the headquarters or to subsidiaries, etc? Finally, future research could address what are considered as functional or dysfunctional and legitimate or illegitimate tactics in MNCs, and to what extent these perceptions depend on the organizational positioning, the cultural as well as the individual background of the beholder.

Managerial élites

Élites, in very general terms, are small groups of people who control a disproportionate amount of access to resources and decision-making rights (Mills Reference Mills1956). Even though there have been élites throughout history, the term ‘élite’, which is of French origin (élire, meaning ‘to elect’), is only about 200 years old. It originally described the group of people who, in the aftermath of the French revolution, were appointed to rule by selection instead of royal succession. With the subsequent rise of democracy in the Western world and its inherent claim of equality, the term ‘élite’ further developed into an antonym for the term ‘masses’, singling out a small group of (still today) mostly men, who, driven by unique values, feel called upon to rule a country, a party or a firm (Schäfers Reference Schäfers2004).

According to Pettigrew, the managerial élite is composed of all those ‘who occupy formally defined positions of authority, those at the head of, or who could be said to be in strategic positions in private and public organizations of various sizes’ (Pettigrew Reference Pettigrew1992: 163). Managerial élites are ascribed great power and influence, both within and across their organizations. However, managerial discretion, power stemming from interlocking directorates and concerted political action are nevertheless constrained by the countervailing influences of other inside and outside actors, as well as by legal provisions, institutional arrangements, industry sector contingencies and traditions (Pettigrew Reference Pettigrew1992). A central theme of this on-going debate is the power distribution between capital owners (sometimes named the ‘financial élite’) and the managerial élite. While in the early days of this debate a hegemony of the managerial élite was assumed (Friedman Reference Friedman1970; Kosnik Reference Kosnik1987), managerial control in large corporations came under increasing attack by owners through the shareholder value discourse of the 1980s (Useem Reference Useem1989). Currently the major shareholders and their fund managers are seen as the ruling class in contemporary capitalism, with the managerial élite ranked second as less powerful agents (e.g. Murray and Scott Reference Murray and Scott2012; van der Zwan Reference van der Zwan2014).

Similarly to other élites, members of the managerial élite show common characteristics in terms of their social origin and their educational backgrounds as well as in their career progression. Hartmann (Reference Hartmann2006, Reference Hartmann2010), for instance, showed that members of the German upper class are much more likely to become part of the managerial élite (in a narrow sense) than equally qualified peers from the working or the middle class. As an explanation for the rather homogenous recruiting of the managerial élite, Hartmann refers to Bourdieu's concept of a class-specific habitus. According to Bourdieu, it is the habitus of a person, i.e. a socially constituted system of dispositions that orient ‘thoughts, perceptions, expressions, and actions’ (Bourdieu Reference Bourdieu and Nice1990: 55), which makes up for distinction and informs the selection process to the inner circle of top managers.

Despite similarities in demography, the behaviour of the managerial élite is not entirely homogeneous, and élite factions are considered to show systematically different attitudes and behaviours. For example, Fligstein (Reference Fligstein1987) showed that the professional background of individuals that make it to the top of large US firms has changed over the duration of the nineteenth century, with entrepreneurs and personnel who came up through manufacturing increasingly being replaced first by sales and marketing personnel, and then later by finance personnel. According to Fligstein, such changes represent intraorganizational power struggles about ‘how to view the world’ that have significant repercussions on (top) management decision making.

Research on top management teams

The heterogeneity of the managerial élite is also the starting point for a large number of studies on top management teams (TMT). According to upper echelons theory (Hambrick and Masen Reference Hambrick and Mason1984; Hambrick Reference Hambrick2007), it is the top management team members’ functional and educational backgrounds, age, industry and firm tenures, socio-economic roots and financial position that inform their decision making. In the same vein, it is the particular composition of managers in a top management team that is responsible for organizational outcomes as diverse as financial performance, environmental fit, intraorganizational conflict and competitive moves, as well as innovation, diversification and internationalization (for an extended overview of this literature see Pettigrew Reference Pettigrew1992 and more recently Carpenter et al. Reference Carpenter, Geletkanycz and Sanders2004).

A considerable number of studies has also discussed the impact of the international experience of TMT members and the national diversity of the TMT composition. Unsurprisingly, firm performance was one major concern of such studies (e.g. Carpenter et al. Reference Carpenter, Sanders and Gregersen2001; Carpenter Reference Carpenter2002; Gong Reference Gong2006). A second area of interest centred around the link between TMT internationalization and the level of corporate internationalization, with a larger number of the earlier studies focusing on the impact of the international experience of TMT members (Reuber and Fischer Reference Reuber and Fischer1997; Tihanyi et al. Reference Tihanyi, Ellstrand, Daily and Dalton2000; Carpenter and Fredrickson Reference Carpenter and Fredrickson2001; Carpenter Reference Carpenter2002; Carpenter et al. Reference Carpenter, Pollock and Leary2003; Jaw and Lin Reference Jaw and Lin2009; Oxelheim et al. Reference Oxelheim, Gregorič, Randøy and Thomsen2013). More recent work has looked at the impact that national diversity in TMTs has on particular features of internationalization, such as market entry strategies (Nielsen and Nielsen Reference Nielsen and Nielsen2011). Recently, Kaczmarek and Ruigrok (Reference Kaczmarek and Ruigrok2013) provided an integration of the two main streams of research, finding that good performance only materializes from national diversity in TMTs when companies have a high degree of internationalization. In a slightly different vein, a few authors viewed the issue from the opposite angle and explored the reasons underlying different levels of TMT internationalization. In this instance, van Veen and Marsman (Reference van Veen and Marsman2008) showed that the level of corporate internationalization is particularly significant, as is the governance regime of the MNC's country of origin. Overall, however, the international demography of TMTs produces rather structural accounts of the various impacts national diversity in TMTs or international experience of TMT members bring forth. This is also the case for the few studies that deal with conflicts in TMTs (e.g. Amason and Sapienza Reference Amason and Sapienza1997). An exception to this is the work of Eisenhardt et al. (Reference Eisenhardt, Kahwajy and Bourgeois1997), which looked at how conflicts can be infused in TMTs in order to force their members to more carefully recognize a broader diversity of perspectives. What is more, the proposition made by Hambrick (Reference Hambrick2007), that the socio-economic and financial position of a TMT member impacts his or her behaviour in TMTs, has not found an inroad in empirical investigations so far. Finally, it is still appropriate to conclude that Pettigrew's (Reference Pettigrew1992) evaluation largely holds true today: i.e. that no-one has studied a TMT in an organizational setting directly observing the team in action; nor have they interviewed members about the links between their individual socio-demographics and their behaviour in organizational decision making.

Research on global élites

This evaluation also holds true for a completely different approach studying international top managers, i.e. the global élite approach. Going beyond the rather empiricist explorations of the TMT literature, a broader and more political debate about the emergence of a transnational élite (also referred to as a cosmopolitan or global élite) has taken off since the new millennium (Kobrin Reference Kobrin1998; Sklair Reference Sklair2002; Robinson Reference Robinson2004). Here it is assumed that a notable and growing fraction of the national corporate élites (i.e. top managers and owners of large firms) is detaching from national interests and power sources and moving towards a deterritorialized profit maximization orientation that is supported by liberal transnational institutions (Caroll Reference Caroll2010). These and some other studies in the global élite tradition (Van der Pijl Reference Van der Pijl1984; Overbeek et al. Reference Overbeek, van Apeldoorn and Nölke2007) are mainly interested in the political ramifications of an increasing transnational concentration of power made up by cross-border mergers and acquisitions (M&As) and alliances, interlocking corporate directorates and transnational policy boards (such as the European Roundtable of Industrialists). While recent empirical studies e.g. on interlocking directorates hardly find empirical evidence that the transnational level is outpacing the national level (Murray and Scott Reference Murray and Scott2012) and some authors in this debate (see the contributions in Morgan et al. Reference Morgan, Hirsch and Quack2015) keep emphasizing the social embeddedness of national élites in their particular variety of capitalism, the global élites literature is nevertheless assuming an ‘ideological solidarity’ of national élites across borders and a common interest in class hegemony (Caroll Reference Caroll2010: 228). However, how this ideological solidarity and class hegemony looks in detail, how it plays out in MNCs and how it influences the interaction of members of different national élites (in a narrower sense) in MNCs has not been studied so far.

As we will see over the next two sections, élite interaction has only been addressed when assuming a broader élite definition. Such a broad definition is given by, e.g., Micklethwait and Wooldridge (Reference Micklethwait and Wooldridge2000: 225–245). According to their phenomenology, the global élite (also referred to as cosmocrats) is made up of internationally minded, well-educated, high-income, job- and performance-oriented people who travel frequently and follow mainly Western values. This includes not only transnationally active professionals (such as lawyers and consultants) but also the large group of upper-middle managers in MNCs who work in international teams and/or manage foreign subsidiaries.

Research on international teamwork

Research on international teamwork (also known as global or cross-border teamwork) has significantly increased over the last two decades. As discussed, it concentrates on cross-border teams formed by upper-middle managers. Nurtured by different academic disciplines such as international management, organizational behaviour, social-psychology, innovation studies, etc. research on international teamwork has been predominately driven by the practical needs of multinational corporations that increasingly organize work across borders. According to a survey by Maznevski and Athanassiou (Reference Maznevski and Athanassiou2006: 631), 85 per cent of a group of 250 senior managers from 53 countries indicated that they conduct more than half of their work in global teams, which they defined as ‘a group of people with a common purpose, working on interdependent tasks, that functions across boundaries of space time and organization’.

Previous research efforts have concentrated on the question of what makes international teams effective, initially using linear approaches to map the impact of, for example, individual factors such as the configuration of teams, leadership issues, task interdependence and degree of virtuality. Recently, efforts have been complemented by a more integrated treatment of the many complex interrelated factors that make up particular configurations (Maznevski and Athanassiou Reference Maznevski and Athanassiou2006; Zimmermann Reference Zimmermann2011).

A great deal of research on team effectiveness focuses on interpersonal relationships in cross-border teams (Zimmermann Reference Zimmermann2011; Menz Reference Menz2012; Mäkelä et al. Reference Mäkelä, Andersson and Seppälä2012), addressing issues such as team identity (Shapiro et al. Reference Shapiro, Von Glinow and Cheng2005) or trust (Jarvenpaa and Leidner Reference Jarvenpaa and Leidner1999). According to the basic premises of social identity theory (Tajfel Reference Tajfel1982) – that individuals identify with a group based on their perceived similarity to others in the team – team heterogeneity is seen as an obstacle to achieving team effectiveness. Even though this view has been challenged (e.g. Stahl et al. Reference Stahl, Mäkelä, Zander and Maznevski2010a; Reference Stahl, Maznevski, Voigt and Jonsen2010b) many authors elaborate on the impact of team heterogeneity.

Team heterogeneity is often conceptualized as cultural diversity (e.g. Bartel-Radic Reference Bartel-Radic2006; Stahl et al. Reference Stahl, Maznevski, Voigt and Jonsen2010b; Lewis Reference Lewis2012). Other accounts of diversity extend to include the nationality of the team members (Athanassiou and Roth Reference Athanassiou and Roth2006), their professional backgrounds (e.g. Menz Reference Menz2012), their (sub)-organizational affiliation (e.g. Maznevski and Athanassiou Reference Maznevski and Athanassiou2006) and their gender (Harrison and Klein Reference Harrison and Klein2007), with some authors addressing several of these aspects simultaneously (e.g. Athanassiou and Roth Reference Athanassiou and Roth2006; Zoogah et al. Reference Zoogah, Vora, Richard and Peng2011). Managing these heterogeneities is seen as vital for team effectiveness. According to Davis and Bryant (Reference Davis and Bryant2003), strong organizational cultures might be able to tame the negative effects of team heterogeneity, with team members in such cases ‘leaving their cultural identity at the door’. Drawing on the notions of social capital and social networks, Maznevski and Athanassiou (Reference Maznevski and Athanassiou2006) propose that international teams are social networks in which social capital can yield positive results on team effectiveness. However, the social capital effects of a common socio-economic background or class membership have not been investigated so far.

Research on managerial élite interaction in foreign subsidiaries

A final stream of literature that promises to address the cross-border interaction of managerial élites is stemming from the more recent literature on subsidiary staffing. While it might be exaggerated to assume élite interaction in the case of every foreign subsidiary, a considerable number of subsidiaries are rather large entities with strategic importance both for the MNC and the career of the subsidiary manager.

Historically, most of the literature on staffing foreign subsidiaries deals with expatriate managers, their selection, adjustment and return (for an overview see Scullion and Collings Reference Scullion and Collings2006). The literature on expatriate selection, for instance, has dealt with national origin, race/ethnicity, gender and age as demographic characteristics that inform the selection of expatriates (Olsen and Martins Reference Olsen and Martins2009). Moreover, in addition to assignment characteristics (such as position filling, developing managers and developing organizations, cf. the classical taxonomy of Edström and Galbraight Reference Edström and Galbraith1977), individual factors such as personality traits, relational skills, language skills and international experience have been studied (Caliguri et al. Reference Caliguri, Ibraiz and Jacobs2009; Cheng and Lin Reference Cheng and Lin2009; Blazejewski Reference Blazejewski2012). However, the socio-economic or class background of expatriates that impacts both their personality and behaviour has so far been neglected.

This is also true for the increasing number of publications that focus on the interpersonal relations of expatriates (also named parent country nationals, or PCNs) with host country national (HCN) managers. However, it has to be mentioned that a few studies at least partly touched upon issues that link up to a study of subsidiary managers’ socio-economic and class backgrounds. Already Hailey (Reference Hailey1996), who conducted one of the first studies to look at the dynamics between expatriates and local managers, maintained that the traditional respect accorded to expatriate managers appears to be waning as a result of the privileges they enjoy. Similarly, Toh and DeNisi (Reference Toh and DeNisi2007) hypothesized that status and pay differences, among other factors, might have a negative impact on the support expatriate managers can expect from local managers. However, this literature is still far from thoroughly recognizing the potential effects that subsidiary managers’ élite status or class membership might have. This is, for instance, demonstrated by a recent paper of Mahajan and Toh (Reference Mahajan and Toh2014) that argued that expatriate adjustment also depends on the level of credibility and trustworthiness local managers have in the eyes of expatriates. Credibility and trustworthiness were narrowly defined here as the local managers’ technical knowledge. Alternative impacts that might equally trigger credibility and trustworthiness, such as a common socio-economic background or élite membership, are not considered.

New directions

While a number of older conceptual studies have argued that the élite concept has the power to explain managerial identity and behaviour in MNCs (e.g. Sklair Reference Sklair2001; Mazlish and Mross Reference Mazlish, Mross, Chandler and Mazlish2005), the way this has found an inroad into empirical studies is disappointing. Overall, the preceding literature review has demonstrated that despite an increasing interest in the demographics and interactions of decision makers in boardrooms, international teams and subsidiary management, hardly any study so far is interested in investigating to what extent the organizational behaviour of managerial actors in MNCs is influenced by their socio-economic background or their class membership. While these topics – despite some isolated referencing (e.g. Hambrick Reference Hambrick2007) – seem to be an anathema in the mainstream international business (IB) literature, the global élite literature, that explicitly looks at the impact of class membership, is rather interested in the political ramifications of an increased power concentration in the hands of a global managerial élite. This situation opens two broad directions for further research:

1. (i) Mainstream IB studies in the realm of top management teams, international teamwork and managerial interaction at the subsidiary level would certainly benefit from considering the socio-economic background or class membership of the actors they study. It can be assumed that class membership or adherence to the same or a similar socio-economic stratum has a strong impact as it works against heterogeneity and problems of trust and credibility that are seen as a particular burden for the inner workings of an MNC. The crucial question here is to what extent do same or similar actor socio-demographics offset differences that stem from different nationalities, cultures and religions prevalent in top management teams, international work teams or subsidiary management teams? While this at first sight just looks like an extension of mainstream IB studies, the study of MNC actors’ class membership also has potential from a power and politics perspective. First, going beyond a rather narrow perspective on performance, a re-evaluation of decision making in MNCs in light of actors’ socio-demographics might provide ideas and insights about long-term political strategies of MNC actors to gain or maintain power. Second, studying managerial decision making in MNCs from the perspective of the actors’ class membership allows for an integrated understanding of how societal inequalities trickle down from the macro-level, over different meso-level indicators such as the MNC actors’ educational and professional backgrounds to the actors’ individual behaviour and decision making in the MNC. Again what seems to be most interesting here are frictions that stem from the fact that MNCs are organizations that cut across many divides but at the same time harbour a particular organizational culture that might be spurred by its country of origin or international best practices.

2. (ii) Using the global élite approach to empirically study intra-organizational processes in MNCs is another interesting new research direction. However, in order to take this direction, first and foremost, research is needed to systematically identify and map the different factions of MNC élites. As discussed above the general debate assumes that there are narrower and broader definitions of who is part of the global élite. In MNCs, top managers and middle managers seem to represent different factions of the managerial élite. However, adherence to these different factions might be to some extent influenced by the particular organizational anchoring of actors in headquarters, in central or peripheral subsidiaries or in particular host countries. Given the strong differences societies show in terms of (in)equality, the country of origin of the MNCs is also supposed to have a considerable impact. Next to identifying and assessing the blending of such impacts in order to come to an understanding of the different factions of the managerial élite in MNCs, future research should then try to gather what is the mindset, or in other words, the dominant ideology, of such managerial élites. Research so far has only provided a sober picture, just claiming that there is an interest in class hegemony as the lowest common denominator. Taking a Bourdieusian perspective, this leaves ample room to empirically explore common thoughts, beliefs, perceptions, expressions and actions of élite members in MNCs through in-depth case-studies. Such research should not only provide full descriptions of the mindset and the way it is propagated and diffused throughout the MNC, but it should also analyse the core beliefs that extend to all élite factions in MNCs and any variations across the different national, cultural and hierarchical élite factions. Moreover, it would be interesting to study these mindsets: (i) from a constructivist perspective, i.e. to what extent are they the result of purposeful action and whose interests went into it?: and (ii) from a conflict perspective that not only involves the different factions of the managerial élite but also other actors in and around the MNC and its constituent parts. Studying the impact of the financial market élite – where power by and large resides nowadays after three decades of financialization (Morgan Reference Morgan, Morgan, Hirsch and Quack2015) – seems to be very relevant here. Moreover, from a power and politics perspective, the study of conflict and resistance to the growing extent of inequality that results from the rapidly growing income of the managerial top élite, seems promising. Finally, linking up the global élite approach to the strongly growing literature on global mangers and global careers, opens up a last set of new research directions. Interestingly, this literature so far offers surprisingly little insights into the processes of social mobility in relation to the MNC élite and its factions. While principles of élite production have been discussed in general (e.g. Clegg et al. Reference Clegg, Courpasson and Phillips2006: 341–357) the question of what makes up for promotion in MNCs of different countries of origin and industries is still widely unanswered. Is the promotion to the global MNC élite based on merit, on class membership in general or on the membership of a particular national élite? What role does gender play? Are there glass ceilings between the different élite fractions in MNCs? And what in general are processes of in- and exclusion as well as signs of distinction? Moreover, is it unclear what role international education and foreign work experience play in moving up to the top of an MNC? While ‘going global’ is still a mantra of many business schools, there is scattered evidence that careers going to the top are made in the home country and the headquarters of an MNC (e.g. Goxe and Belhoste Reference Goxe and Belhoste2015; Pohlmann Reference Pohlmann2009). More research is also needed to uncover the dark sides and the personal and psychological costs that often lurk behind a global career (McKenna et al. Reference McKenna, Ravishankar and Weir2015) that often is portrayed as a glamorous opportunity for young ambitious aspirants.

To sum up, the élite concept holds strong potentials for the study of MNCs as politial organizations. Next to fertilizing a number of mainstream IB debates by infusing a power and politics perspective, it also offers the opportunity to work against Zald and Lounsbury's (Reference Zald and Lounsbury2010) conlusion that organizational theorists for a number of decades have distanced themselves ‘from the study of core societal power centers’ (963).

What are emerging economies?

Many different ‘emerging market’ definitions and conceptualizations have been suggested. Basically, there are two types of emerging market definitions: broader and narrower ones. Ciravegna et al. define the term broadly. They distinguish between rich countries – the US, Canada, Western Europe, Japan, Australia, New Zealand, South Korea, Taiwan, Hong Kong and Israel – and emerging markets; the latter term ‘refers to all other countries’ (Reference Ciravegna, Fitzgerald and Kundu2013: 15). Other international business (IB) scholars distinguish between emerging markets and developing economies. According to Cavusgil et al.:

Thus, they make a difference between economies that have already made a significant progress in catching up to fully developed economies – emerging economies in the true sense – and other relatively poor economies that, despite having the potential to emerge, have not significantly progressed in their development in recent years. The latter type of countries are considered developing economies.

More recently, efforts have been made to distinguish emerging markets in a more systematic way (e.g. Hadjikhani et al. Reference Hadjikhani, Elg, Ghauri and Ghauri2012; Hoskisson et al. Reference Hoskisson, Wright, Filatotchev and Peng2013; Zhang and Whitley Reference Zhang and Whitley2013). For instance, exploring the diversity in Asian business systems, Zhang and Whitley (Reference Zhang and Whitley2013) find substantial differences in terms of varying state direction of the economy and in terms of the nature and degree of business coordination of economic activities (i.e. co-governed, state-led, networked and personalized). Notwithstanding major differences in these approaches, they share the insight that dominant institutions of economic governance, the nature of socio-political actors and the diverse modes of government–business relations are key to understanding both substantial differences across emerging markets and emerging market multinationals.

Emerging market multinationals

The IB&M literature has discussed a range of traits that EMNCs tend to have in common and that distinguish them from Western MNCs. For instance, there is some agreement that a major prerequisite for EMNC internationalization are both advantageous and disadvantageous conditions in their home countries (Cuervo-Cazurra and Genc Reference Cuervo-Cazurra and Genc2008; Deng Reference Deng2012; Lessard und Lucea Reference Lessard, Lucea, Ramamurti and Singh2009; Luo and Tung Reference Luo and Tung2007; Ramamurti Reference Ramamurti, Ramamurti and Singh2009; Rugman Reference Rugman, Ramamurti and Singh2009). With regard to internationalization motives, a range of scholars suggest that EMNCs often internationalize to acquire rather than to exploit firm assets (Luo and Tung Reference Luo and Tung2007; Mathews Reference Mathews2006).

Guillen and Garcıa-Canal (Reference Guillen and Garcia-Canal2009) suggest that new MNCs from emerging markets differ systematically from traditional MNCs in their speed of internationalization, their competitive advantages, their political capabilities and their organizational adaptability (see Table 12.1 above).

In a similar vein, Kale et al. (Reference Kale, Singh and Raman2009) contrast the different approaches to international mergers and acquisitions between traditional MNCs and EMNCs. Kale et al. (Reference Kale, Singh and Raman2009) argue that EMNCs tend to follow a partnering approach. The partnering approach involves that EMNCs keep the acquired companies separate and only coordinate a few selected activities. As part of their approach they also retain top executives and allow for a high autonomy of the acquired unit. Hence, integration is rather slow and piecemeal. This contrasts with the fast integration approach by traditional MNCs. The latter are seen to absorb the acquired company. This entails integrating core and supporting activities very fast. In this approach top executives tend to be replaced and there is no or very little remaining autonomy for the acquired company.

Other scholars have made efforts to map differences among EMNCs. In their seminal contribution, Luo and Tung (Reference Luo and Tung2007) discuss major differences among EMNCs. They ‘define EM MNEs as international companies that originated from emerging markets and are engaged in outward FDI, where they exercise effective control and undertake value-adding activities in one or more foreign countries’ (Reference Luo and Tung2007: 482). This definition excludes companies from emerging markets that have not engaged in FDI or engaged in FDI only for the purpose of ‘round-tripping’ of investment. The latter involves companies setting up and investing in a foreign subsidiary, usually in tax haven countries such as the Cayman Islands, and then reinvesting their money back into their home countries to obtain preferential treatment which is offered to foreign investors by their home country (see also Dunning and Lundan Reference Dunning and Lundan2008). The above definition also excludes state-owned companies that solely pursue political objectives and do not aim for the optimization of corporate returns.

Luo and Tung (Reference Luo and Tung2007) categorize EMNCs into four groups based on the dimensions: ownership (non-state owned versus state-owned) and international diversification (breadth of geographical coverage of international markets). State-owned EMNCs that have invested aggressively to seize market opportunities abroad are categorized as transnational agents, and as commissioned specialists if their international diversification is more limited. Both transnational agents and commissioned specialists pursue business objectives and, due to their ownership by the state, political objectives. Non-state-owned EMNCs are categorized as niche entrepreneurs when they operate in a narrow band of international markets, and as world-stage aspirants when their geographical coverage is more diversified.

Luo and Tung's elaborate categorization of EMNCs can be further complemented by the insights of the vast business group literature (e.g. Khanna and Palepu Reference Khanna and Palepu2000). This literature suggests that the ownership and the international diversification dimensions are not sufficient to differentiate EMNCs. The business group literature suggests that EMNCs also vary substantially along the industry diversification dimension (focused versus diversified) and the type of private ownership. While some EMNCs are focused on a particular industry, a large number of EMNCs are business groups that operate businesses, which are interconnected through cross-shareholdings, in a variety of industries (often they are also termed diversified conglomerates). The other distinguishing feature among EMNCs is the type of private ownership. In emerging markets a large percentage of businesses is owned and controlled by families. Often, these family firms are organized in the form of business groups (Amsden Reference Amsden, Ramamurti and Singh2009; Khavul et al. Reference Khavul, Bruton and Wood2009). Hence, given the fact that there is an extensive literature on the differences between family and non-family firms (Classen et al. Reference Classen, Carree, Gils and Peters2014; Miller et al. Reference Miller, Lee, Chang and Le Breton-Miller2009), not least in terms of internationalization (Strike et al. Reference Strike, Berrone, Sapp and Congiu2015), this distinction seems to be also relevant.

Based on the brief review of key features of EMNCs, we will exemplarily ask in the next section how common traits and differences in EMNCs translate into new research directions for the research on politics, power and conflict in MNCs.

New research directions

New sets of actors: A crucial element in understanding micropolitics and conflict in MNCs involves a sound understanding of who the key and relevant actors are. While not systematically researched so far, different ownership modes of EMNCs suggest different sets of key and relevant actors in the political arena of EMNCs. For instance, state-owned enterprises may involve either the presence of powerful government actors within the MNC or at least a high relevance of government actors in the EMNCs’ environment (cf. Hadjikhani et al. Reference Hadjikhani, Elg, Ghauri and Ghauri2012).

The fact that many emerging markets are rich in resources has also led to the emergence of sovereign wealth funds in countries such as Russia (e.g. Russian National Wealth Fund), or Qatar (e.g. Qatar Investment Authority). The individual mandates of sovereign wealth funds, which are state actors, differ. The sovereign wealth funds of Abu Dhabi, for instance, are required to invest in the economy of the United Arab Emirates to support the development of economic clusters (Hurst Reference Hurst2014). Hence, sovereign wealth funds and their specific representatives might also be a group of actors which deserves more attention when analysing sets of actors in the political arena of EMNCs. As EMNCs are seeking to become truly global companies, these funds might play a more prominent role as influencial actors in the future.

In a similar vein, the business group literature suggests that next to professional management, members of the owning family may play a crucial role in influencing business decisions in family-owned business groups. The interplay of family and non-family actors deserves a closer examination in these types of EMNCs.

Overall, we have little systematic knowledge about how sets of key and relevant actors differ between developed country MNCs and EMNCs, but also between different types of EMNCs.

New types of actor interests and resources: Different types or sets of key and relevant actors also introduce a range of different interests and resources into the micropolitical dynamics of EMNCs. In state-owned or partly state-owned EMNCs we can imagine that managers feel the need to serve two masters or that different actors within the same firm serve different masters. This may lead to a situation where some actors pursue business objectives and others seek to promote the political agenda. With respect to sources of power, these different actors may also have access to different kinds of networks or social capital and thereby to different kinds and scales of resources. In China, for instance, the internationalization of state-owned EMNCs is strongly supported by government funds (e.g. Gökgür Reference Gökgür2011), which potentially provides those actors who represent the government interests with abundant resources within the firm.

Family-owned companies may also witness specific constellations of actor interests and diversity wherein family interests may systematically differ from those of professional/non-family managers. For instance, while family interest may involve long-term growth and sustainability or simply providing employment and senior positions for family members, professional managers may be inclined to promote more short-term business success. Relatedly, based on the family ownership and governance, family members might find it much easier to mobilize resources through the internal family network and to influence micropolitical processes and organizational outcomes in their interests.

Overall, we still have rather limited knowledge about how the corporate governance varies in different types of EMNCs and how this, in turn, informs structures of interests and resource distribution.

However, it is not only the ownership and governance modes of EMNCs that have a bearing on micropolitics. The condition that many EMNCs are seen to internationalize with the goal to acquire assets rather than to exploit extant assets and the fact that these firms are prone to adopting a partnering approach with international acquisitions may translate into different interests of EMNC managers. In such a scenario, expatriate subsidiary managers’ main interests may be reflected in long-term learning objectives rather than in quick integration, synergies or efficiency gains.

Similarly, an accelerated speed of internationalization combined with a partnering approach in post-merger integration and a higher autonomy for the acquired firm may also give more room and opportunity for local interest articulation.

Relatedly, if an acquisition is driven by the EMNCs’ motivation to learn, actors in the acquired subsidiary may find it much easier to leverage their capabilities and competences as political resources compared to a situation in which the acquisition is driven by fast integration, efficiency seeking and synergy realization.

At the same time, the asset-seeking motive of EMNCs, especially when it is in a south–north direction, may trigger interest structures in subsidiaries of withholding knowledge and competences. Such interest could be based on the actors’ fear of losing key knowledge, not receiving crucial assets in return and weakening the subsidiaries’ role in the long run.

Lastly, a deeper concern with the different kinds of emerging markets and their socio-political actors also opens new perspectives for understanding different kinds of dominant coalitions (cf. Zhang and Whitley Reference Zhang and Whitley2013), related interest structures and resource mobilization opportunities within and outside EMNCs (cf. Hadjikhani et al. Reference Hadjikhani, Elg, Ghauri and Ghauri2012). The strong relevance of access to local personal networks (i.e. Guanxi in China), limitations on foreign ownership (e.g. oil and gas sector in Egypt), and the weak market supporting institutions in some emerging economies put pressure on foreign MNCs to form joint ventures with local players (Peng and Meyer Reference Peng and Meyer2011). These local companies can be expected to have a set of interests (such as access to proprietary technology) and resources (such as state support) that MNCs investing in emerging markets may find difficult to accommodate (especially if enforcement of intellectual property rights is absent or ineffective).

In sum, diverse ownership patterns, internationalization motives and paths of EMNCs as well as different institutional settings in emerging markets not only bring new actor constellations into the picture, but also corresponding interests and sources of power. A key challenge of future research on micropolitics in emerging markets will involve relating typical EMNC features and EMNC diversity, as well as emerging market diversity to specific interest structures and resource mobilization opportunities of key actors or actor coalitions. Understanding such different actor sets, interests and resource structures may, in turn, play a crucial role in understanding both the organizational behaviour and strategic choices of internationalizing EMNCs as well as of those MNCs successfully operating in emerging markets.

New lines of conflicts: The potentially different nature and behaviour of EMNCs may also imply different kinds of conflict when comparing traditional and new MNCs or different types of EMNCs. A crucial element will again be different types of ownership and corporate governance of EMNCs. For instance, as mentioned earlier, state-owned EMNCs might witness lines of conflict that are related to the condition that they need to respond to business and political objectives at the same time. In the host context, in turn, such political objectives might be greeted with suspicion leading to conflict within both the foreign affiliate and the host context (see Sauvant and Strauss (Reference Sauvant and Strauss2012) on regulatory responses by the USA to state-owned and controlled multinational enterprises).

Similarly, family-controlled EMNCs hold the potential for conflict for various reasons. Conflicts can arise from interference of family members in the management of these companies (Cavusgil et al. Reference Cavusgil, Ghauri and Akcal2013: 75). There are indications that Southeast Asian societies have particular problems to trust outsiders (Fukuyama Reference Fukuyama1995; Santiago Reference Santiago2000). This might lead to conflicts within companies based in emerging markets when they internationalize and are increasingly reliant on professional non-family managers to succeed in foreign markets. An additional source of conflict, which might become more pressing in the future, is the succession in family-controlled EMNCs. Most EMNCs are relatively young compared to their counterparts from developed countries, they are usually only a few decades old, and the founders of these companies are often still involved in strategic decision making (Ciravegna et al. Reference Ciravegna, Fitzgerald and Kundu2013). In the coming years and decades, however, a change at the head of the company will become inevitable. Power struggles may arise between members of the family and non-family managers over the future leadership as well as between different members, or even branches, of the family. This problem might be particularly pronounced in EMNCs in which foreign subsidiaries account for the majority of the revenues. Examples that fit into these categories are the Indian MNC Tata Group (controlled by the Tata family; c. 75 per cent of revenues from foreign markets), and Reliance Industries (controlled by the Ambani family, c. 68 per cent of revenues from foreign markets) (Karnik Reference Karnik2014).

In such EMNCs, the top managers of foreign subsidiaries are usually not members of the family. They can be expected to be influential and opposed to the selection of successors based on family relationships instead of performance. This may lead to conflicts because owners of family-controlled EMNCs might prefer family members as successors. In fact, a comparative study on succession in family firms found out that family relationships are more important successor attributes for Indian owners than for Canadian owners; conversely, interpersonal skills, past performance and experience are more important for Canadian owners of family businesses (Sharma and Rao Reference Sharma and Rao2000; see also Ward Reference Ward2000).

Business groups may also see conflicts that are related to their conglomerate structure. A large percentage of companies in emerging markets can be considered business groups or diversified conglomerates (e.g. Cavusgil et al. Reference Cavusgil, Ghauri and Akcal2013; Ciravegna et al. Reference Ciravegna, Fitzgerald and Kundu2013). When these companies internationalize, the need to get access to increasingly large amounts of capital to finance the internationalization might put these EMNCs under pressure to sell off assets (in the form of non-core businesses) in their home country. The Mexican EMNC Cemex, for instance, sold non-core business activities to become a world leader in the cement business (Cavusgil et al. Reference Cavusgil, Ghauri and Akcal2013). Such attempts to finance the internationalization can be expected to meet heavy resistance from management in the domestic market, since vested interests are bound to be affected. The internationalization of TATA motors is a similar case, where the costly internationalization of the business division required cross-subsidizations and resource concentrations that potentially drained the resource endowment of other business divisions in the conglomerate (Becker-Ritterspach and Bruche Reference Becker-Ritterspach and Bruche2012). Such cross-subsidizations and resources diversions are likely to produce hefty internal battles around the internationalization efforts of different business divisions. Hence, this organizational form, which is widespread in emerging markets, might be a key source of micro-political conflicts. Combining this insight with previous insights into family-controlled EMNCs suggests family-owned business groups to be particularly interesting for further research, due to the wide range of sources of conflict they may host.

Apart from different ownership modes, corporate governance mechanisms in EMNCs have been argued to be often weak (Luo and Tung Reference Luo and Tung2007). This is attributed to different factors such as underdeveloped stock markets in home countries, poor accountability and a lack of transparency stemming from close ties between some EMNCs and governments (Luo and Tung Reference Luo and Tung2007). Weak governance mechanisms, in turn, may give rise to conflicts between subsidiary and headquarters actors, especially when subsidiaries are embedded in institutional contexts that demand high transparency and accountability from subsidiary management (Brennan Reference Brennan2015). Referring to Chinese MNCs, Brennan states for instance:

Yet, there are potentially other sources of conflict that spring from the speed and motivation of EMNC internationalization. A high speed of internationalization of EMNCs might lead to conflicts between different factions of management in the headquarters. Such factions and related conflicts may develop around the challenges of post-merger or post-acquisition integration or absorption of newly acquired assets (see also Lou and Tung Reference Luo and Tung2007 on challenges of rapid internationalization and post-acquisition difficulties). For instance, there may be conflicts around the speed at which the knowledge of a large number of newly acquired units shall be or can be leveraged and diffused throughout the multinational.

Relatedly, the fact that EMNCs are seen to internationalize to acquire (e.g. natural resources or proprietary knowledge) rather than to exploit organizational advantages might trigger suspicion, political tension and resistance in both foreign affiliates and host contexts (cf. Sauvant and Chen Reference Sauvant and Chen2014). Such resistance can be based on the fear that once knowledge is acquired, sites get downsized or shut down. It can also be based on concerns about a lack of contribution to the development of or knowledge transfer to local subsidiaries or more broadly lacking developmental effects on the local context. A case in point are the concerns that have been voiced with respect to Chinese resource-seeking FDI in Africa (Sauvant and Chen Reference Sauvant and Chen2014). However, resistance can also be based on national pride and prejudice when supposedly ‘backward’ EMNCs take over companies that are considered national ‘crown jewels’.

In addition to internationalization motivation and speed, there may also be diverse conflicts that spring from the condition that EMNCs are only at the beginning of building global experience. In this context Luo and Tung argue:

However, there are also features of EMNCs that suggest reduced conflict in their path of internationalization. We base this on contributions emphasizing their organizational adaptability (Guillen and Garcıa-Canal Reference Guillen and Garcia-Canal2009) and partnering approach in international mergers and acquisitions (Kale et al. Reference Kale, Singh and Raman2009), which may mitigate conflicts with local subsidiary management. Specifically, keeping an acquired company separate and selectively coordinating only a few activities or granting autonomy and retaining local top management or implementing integration in a gradual way with a long-term outlook may all serve to avoid hefty clashes with local management and employees (see Hutton Reference Hutton2013 on TATA's careful approach in its Jaguar Land Rover acquisition).

Moreover, the political capability attributed to EMNCs (Guillen and Garcıa-Canal Reference Guillen and Garcia-Canal2009) may also have some repercussions for their conflict propensity. On the one hand, the EMNCs’ familiarity with emerging markets and their related political capability to navigate unstable institutional environments and to deal with high levels of government involvement or intervening host context governments may serve to reduce conflict within their subsidiaries and also with key actors in the host environment. On the other hand, these very political capabilities, that are often based on ‘relationship-based governance mechanisms’ (Luo and Tung Reference Luo and Tung2007: 15), may create tension and conflict if they are applied in non-emerging market contexts. We may see, for instance, conflict between headquarters and subsidiary actors or between expatriates and local employees, if headquarters or expatriates find it difficult to understand that certain types of political strategies and governance mechanisms that work well in emerging market contexts may not work in developed economies.

Finally, while cultural differences (e.g. Hofstede Reference Hofstede1980) in work-related values and culture-specific leadership styles (House et al. Reference House, Hanges, Javidan, Dorfman and Gupta2004) have been widely researched, there is so far little systematic knowledge on how such differences translate into different types of conflict within EMNCs but also within developed market MNCs entering emerging markets. In this context, Brennan (Reference Brennan2015) provides us with a glimpse of the manifold intercultural challenges Chinese MNCs face in Europe:

In a same vein, we are also still at the beginning with regard to the question of how colonial pasts, geopolitical hierarchies and related notions of superiority and inferiority (Frenkel Reference Frenkel2008) translate into micro-political battles in EMNCs or traditional MNCs that operate across the developing-developed world divide.

Conclusion

In this chapter, we showed that there is still only little knowledge about how traditional or developed economy MNCs differ from emerging market MNCs in their micropolitical constitution. At the same time, there is hardly any knowledge about how EMNCs differ from one another in their micropolitical constitution. We suggested that this gap can be addressed in a first step by a cross-fertilization of the literature on EMNCs and micropolitical perspectives within the field of IB&M. Specifically, we tried to show that common and diverse features of EMNCs might go along with specific sets of key actors, structures of interests and resources as well as related lines of conflict. Our brief discussion also suggested that we need a more systematic exploration of how the embeddedness of MNCs across diverse cultural and institutional environments influences actor constellations, actor interests and resources and thereby the organizational politics and conflicts that ultimately help to explain the organizational behaviour of MNCs in and from emerging markets. Overall, we see here the opening of a vast field of research that would systematically compare the antecedents, patterns and consequences of micropolitics between both developed market MNCs and emerging market MNCs as well as between different types of MNCs from emerging markets. We acknowledge that while offering a vast field of research such a research agenda comes with substantial challenges. Apart from the logistical and methodological challenges of working in intercultural research teams, the nature of micropolitics research itself makes company access generally difficult and particularly to companies and contexts where outsiders need to engage in long-term trust-building efforts before being allowed into the company.