Phillip C. Nell

Understanding Agency Problems in Headquarters-Subsidiary Relationships in Multinational Corporations A Contextualized Model

This paper proposes an agency model for headquarters-subsidiary relationships in multinational organizations with headquarters as the principal and the subsidiary as the agent. As a departure from classical agency theory, our model is developed for the unit level of analysis and considers two root causes of the agency problem—self-interest and bounded rationality. We argue that in the organizational setting, one cannot assume absolute self-interest and perfect rationality of agents (subsidiaries) but should allow them to vary. We explain subsidiary-level variation through a set of internal organizational and external social conditions in which the headquarters-subsidiary agency dyad is embedded. We then discuss several agency scenarios reflecting various levels of self-interest and rationality that lead to different manifestations of the agency problem. The proposed framework can inform more relevant applications of the agency perspective in organizational studies and motivate future research.

The Benefits of Hierarchy? - Exploring the Effects of Regional Headquarters in Multinational Corporations

This paper investigates the role Regional Headquarters (RHQs) play in large multinationals. It investigates if the establishment of a RHQ creates “hierarchy benefits�? to the firm that are in line with eh M-form principles. Based on rich qualitative data that we collected for nine different firms (MNCs) in three different industries, we find evidence for benefits of hierarchy when RHQs are introduced very much along the lines of the classic M-form organization with product divisions. However, M-form principles are taken ad absurdum by the fact that there seems to be constant re-organization regarding the mandates and the geographic scope of the regions. This calls into question the effectiveness of RHQs.

Combining Stocks and Flows of Knowledge: The Effects of Intra-Functional and Cross-Functional Complementarity

In the area of knowledge management and knowledge governance, previous research has mostly focused on either knowledge stocks or knowledge flows of firms or organizational units. Contrary to this work, our study is among the first to integrate these two perspectives in order to shed light on the complementarity effects of different types of knowledge stocks and flows in the multinational corporation (MNC). We investigate intra-functional as well as cross-functional complementarity effects from the perspective of the knowledge recipient. We test the impact of stocks on flows on the benefit that is created for MNC units. Based on a comprehensive sample of 324 relationships between MNC units we find that both types of complementarity create benefits for these units, but that the effects from intra-functional combinations of knowledge stocks and flows are significantly stronger than from cross-functional combinations.

How does Geographic Distance Impact the Relevance of HQ Knowledge?: The Mediating Role of Shared Context

Abstract With this chapter, we seek to shed light on the question how headquarters (HQ) can cope with geographic distance and effectively transfer relevant knowledge to their subsidiaries. By constructing a mediating model, we aim at disentangling the effects of geographic distance on the relevance of HQ knowledge to their subsidiaries, via the creation of a shared context between HQ and their subsidiaries. We tested our hypotheses using partial least squares based structural equation modelling on a sample of 124 European subsidiaries. We did not find a significant direct relationship between geographic distance and HQ knowledge relevance. Yet, we found support for our mediation hypotheses that geographic distance makes it more difficult for HQ to establish a shared normative and operational context, but that both dimensions of shared context can help HQ to transfer relevant knowledge to their subsidiaries. We contribute to the research on knowledge flows in multinational corporations (MNC) by investigating knowledge relevance directly rather than knowledge flows as such. We also advance our understanding of shared context in HQ-subsidiary relationships by showing that shared context comprises an operational and a normative dimension. Moreover, we contribute to social learning theory in basing our reasoning on the idea that shared practices and social relationships help overcoming distance to manage knowledge transfer more effectively. Finally, we add to the research of distance in international business by conceptualizing space, organizational context and knowledge transfer in one comprehensive model.

Subsidiary contribution to firm-level competitive advantage – disentangling the effects of MNC external embeddedness

Purpose – The purpose of this chapter is to develop a more fine-grained model of the relationship between multinational corporation (MNC) external embeddedness and subsidiary contribution to firm-level competitive advantage. Methodology/approach – We briefly review previous international management literature and show that the conception of MNC embeddedness in external networks is often simplistic. We develop the concept of the HQ–subsidiary dyad being externally embedded and derive propositions on how this more holistic concept of MNC embeddedness influences subsidiary contribution. Findings – We argue that subsidiary contribution depends not only on the relational embeddedness dimension of the subsidiary but that there is a complex interplay between several embeddedness dimensions on multiple levels. We suggest that the much emphasized effect of subsidiary relational embeddedness might be contingent on the HQs own relationships, and the structure of the overall network. We also develop propositions which show that subsidiary relational embeddedness mediates the relationship between overall network structure and subsidiary contribution. Research limitations – For the sake of theoretical stringency, we keep other influencing factors such as MNC strategy and specific subsidiary mandates as constant. Originality/value of the chapter – Subsidiaries are an important source of firm-level competitive advantage. Subsidiary resources have also been shown to develop to a large extent in relationships with external actors. Despite this importance, we argue that our understanding of how the MNC is embedded in external networks and how this in turn influences subsidiary contribution is limited. This chapter attempts to make a first step into filling this gap.

Redundancies in External Relationships of Multinational Corporations — A Firm-Level Conceptual Model

Redundancies in External Relationships of Multinational Corporations : A Firm Level Conceptual Model and Preliminary Evidence

Entrepreneurial Capabilities at the Regional Level in Multinational Enterprises – The Roles of Intra-Regional Dissimilarity and Embeddedness

This study investigates entrepreneurial capabilities of regional headquarters (RHQs). In our conceptual development, we build on entrepreneurship and MNE embeddedness literature to suggest that intra-regional dissimilarity as well as RHQs’ regional embeddedness are positively related to the level of RHQs’ entrepreneurial capabilities. We illustrate our arguments on the basis of data on European RHQs. In addition, our study opens up for an interesting discussion of these mechanisms’ interdependence. This contributes to our understanding of RHQs as important entrepreneurial actors within the MNE, the structuring of regions, and the importance of MNE external embeddedness.

MNC Headquarters as Global Network Orchestrators: Insights from Headquarters Relocation Patterns in Europe

Despite increased interest in headquarters (HQ) and their activities, we still lack a comprehensive understanding of the drivers of HQ relocations and their consequences. We seek to address this gap by examining whether HQ relocations are primarily driven by cost-reduction or value-creation motives, whether these motivations vary by HQ type and how these relocation patterns vary over time. We explore these questions on the basis of a unique hand-collected database of 227 HQ relocations in Europe between 2000 and 2012. Our findings illustrate that different types of HQ units play their orchestrating role in different ways and that their relocations are driven by different motives. Furthermore, our data suggest that although all types of HQ units are increasingly mobile, the implications of relocations for the MNE may differ considerably by HQ type. These findings contribute to a more fine-grained understanding of the drivers of HQ relocations, and open up various new avenues for future research on HQ relocation and the role of HQ units in the orchestration of MNEs’ internal networks.

Political Strategies as a Response to Public and Private Stakeholder Pressures

We aim at providing a more precise differentiation of external stakeholder pressures and their impact on multinational corporation (MNC) subsidiaries’ political strategies. Thus, we analyse whether external stakeholder pressures entail a more intense use of political strategies, and whether pressures from public stakeholders are more influencing compared to pressures from private stakeholders. We use ordinary least squares (OLS) regression analysis to test our hypotheses with data from 157 subsidiaries in Brazil, Russia, Turkey, India, China and South Africa. We found that the higher external stakeholder pressures on the MNC subsidiary, the more intensely subsidiaries apply political strategies. Furthermore, both public and private stakeholder pressures affect political strategies in a positive way, but our results show no statistical significance for a difference in impact. The study differentiates the general concept of external stakeholder pressures into pressures from national public and national private stakeholders.

Global Pharma – Das Ende eines erfolgreichen Business Models?

Im Juni des Jahres 2010 sas Jeffrey Kindler, der CEO von Pfizer, beim World Innovation Forum und sprach uber die Entwicklung der Pharmaindustrie. Kindler war vor einigen Jahren von McDonalds zu Pfizer gewechselt und hatte viel Energie darauf verwandt, die Pharmaindustrie und Pfizer im Detail zu verstehen. Mit einigen Entwicklungen war er nicht sonderlich glucklich. Pfizers Umsatz stagnierte. Der Gesamtumsatz in 2009 lag ungefahr bei 50 Milliarden USD, nur ca. 1,6 Milliarden mehr als in 2007. Vor allem sein Top Blockbuster „Lipitor“, ein Cholesterin- Senker, der in vergangenen Jahren ca. 40 % des Gewinns ausmachte, verlor Momentum: 2009 erzielte Lipitor nurnoch 11.4 Milliarden USD.