Headquarters–subsidiary relationships from a social psychological perspective: how perception gaps concerning the subsidiary's role may lead to conflict

doi:10.1017/CBO9780511973352.009

8 - Headquarters–subsidiary relationships from a social psychological perspective: how perception gaps concerning the subsidiary's role may lead to conflict

Published online by Cambridge University Press: 26 April 2011

Stefan Schmid and

Andrea Daniel

Edited by

Christoph Dörrenbächer and

Mike Geppert

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Stefan Schmid: Affiliation:
Strategic Management at ESCP Europe, Germany
Andrea Daniel: Affiliation:
ESCP Europe, Berlin
Christoph Dörrenbächer: Affiliation:
Berlin School of Economics and Law
Mike Geppert: Affiliation:
University of Surrey

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Summary

Introduction

In the international business (IB) literature, headquarters–subsidiary relationships are one of the central research topics (Johnston 2005; Paterson and Brock 2002). The question of how to manage relationships between headquarters and subsidiaries is also of practical relevance (Doz and Prahalad 1981; 1984). In this context, perception gaps between headquarters and subsidiary managers are a common phenomenon in multinational companies (MNCs) that is, however, still under-researched (Schmid and Daniel 2007). To illustrate the character and the implications of perception gaps, we will start this chapter with a brief case study. Research for the case was conducted in 2008, and comprised interviews with headquarters and subsidiary managers of a German MNC (for more details on the empirical case see Daniel 2010: 170–81).

In 1999, Autocomp – a German automotive supplier – acquired a Turkish firm to become one of several foreign subsidiaries of Autocomp. In its former group, the subsidiary had enjoyed considerable autonomy in its decision-making and operations. At the time of the acquisition, however, Autocomp's management aimed at integrating the new subsidiary into its network to the same extent as its other subsidiaries. From the perspective of the headquarters, this integration implied significant cuts in the subsidiary's autonomy in such areas as purchasing and sales, which were highly centralized at Autocomp. However, the Turkish subsidiary's management did not consider any potential impact of a change in ownership on the subsidiary's autonomy.

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Type: Chapter
Information: Politics and Power in the Multinational Corporation
The Role of Institutions, Interests and Identities
, pp. 255 - 280

DOI: https://doi.org/10.1017/CBO9780511973352.009 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2011

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