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Control changes in multinational corporations: Adjusting control approaches in practice

Abstract

The issue of control in multinational corporations (MNCs) is central to international business scholarship. However, prior literature tends to provide a static perspective offering few theoretical insights on control changes, especially the practices that enable control adjustments. Adopting a practice theory perspective, we consider control as “in the making” whereby adjustments emerge through a social accomplishment, constituted and reconstituted as headquarters and subsidiaries engage in a co-creating process. Using a longitudinal case study approach, we had the rare opportunity to track and compare an unsuccessful and a successful attempt to adjust control in an MNC over time. Our main theoretical contribution is a model of adjusting control in MNCs that details the practices that enable control changes. This model offers theoretical implications for organizational control theory in MNCs, especially in relation to theorizing the subsidiary contribution in the design of control, the reconciliation of raised tensions in headquarters–subsidiary relationships, and the nature of unintended consequences in the adjustment process. Our study also contributes to theories on MNC change, as it details the construction of an ongoing strategy–structure alignment for strategic flexibility.

Résumé

La question du contrôle au sein des entreprises multinationales (EMN) est au cœur de la recherche en international business. Cependant, la littérature antérieure tend à fournir une perspective statique offrant peu d’aperçus théoriques sur les changements relatifs au contrôle, en particulier sur les pratiques qui permettent d’ajuster le contrôle. En adoptant une approche par la théorie de la pratique, nous considérons le contrôle comme étant “en cours de réalisation”, c’est-à-dire que les ajustements apparaissent par le biais d’un accomplissement social, constitué et reconstitué, lorsque le siège et les filiales s’engagent dans un processus de co-création. Utilisant une approche d’étude de cas longitudinale, nous avons eu la rare opportunité de suivre et de comparer une tentative infructueuse et réussie d’ajustement du contrôle dans une EMN au fil du temps. Notre principale contribution théorique est un modèle d’ajustement du contrôle dans les EMN qui détaille les pratiques permettant de modifier le contrôle. Ce modèle offre des implications théoriques pour la théorie du contrôle organisationnel dans les EMN, notamment en ce qui concerne la théorisation de la contribution des filiales dans la conception du contrôle, la réconciliation des tensions accrues dans les relations siège-filiales et la nature des conséquences involontaires dans le processus d’ajustement. Notre étude contribue également aux théories sur le changement dans les EMN car elle détaille la construction d’un alignement continu entre la stratégie et la structure pour une flexibilité stratégique.

Resumen

El asunto de control en las corporaciones multinacionales (MNCs por sus iniciales en inglés) es central a conocimiento académico en negocios internacionales. Sin embargo, la literatura previa tiende a suministrar una perspectiva estática que ofrece pocos aportes teóricos sobre los cambios de control, especialmente las practicas que permiten ajustes de control. Al adoptar una perspectiva de teoría ligada a la práctica, consideramos el control como “en proceso” según el cual los ajustes emergen mediante un logro, constituido y reconstituido como la casa matriz y las subsidiarias participan en un proceso de co-creación. Al usar una perspectiva de estudio de caso longitudinal, tuvimos la oportunidad excepcional para rastrear y comparar un intento fallido y uno exitoso para ajustar control en una corporación multinacional a lo largo del tiempo. Nuestra principal contribución teórica es un modelo de ajuste de control en una corporación multinacional que detalla las prácticas que permiten los cambios de control. Este modelo ofrece implicaciones teóricas para la teoría de control organizacional en corporaciones multinacionales, especialmente en relación con la teorización de la contribución de la filial en el diseño de control, la reconciliación de las tensiones suscitadas en las relaciones entre la casa matriz y las filiales y las consecuencias intencionadas del proceso de ajuste. Nuestro estudio también contribuye a las teorías sobre el cambio en la corporación multinacional dado que detalla la construcción de una alineación continúa de estrategia-estructura para la flexibilidad estratégica.

Resumo

A questão do controle em corporações multinacionais (MNCs) é central para os estudos de negócios internacionais. No entanto, a literatura existente tende a fornecer uma perspectiva estática, oferecendo poucos insights teóricos sobre mudanças de controle, especialmente as práticas que permitem ajustes de controle. Adotando uma perspectiva de teoria prática, consideramos controle como “em formação” em que ajustes surgem por meio de uma realização social, constituída e reconstituída à medida que matriz e subsidiárias engajam-se em um processo de cocriação. Usando uma abordagem de estudo de caso longitudinal, tivemos a rara oportunidade de rastrear e comparar uma tentativa malsucedida e uma tentativa bem-sucedida de ajustar o controle em uma MNC ao longo do tempo. Nossa principal contribuição teórica é um modelo de ajuste de controle em MNCs que detalha as práticas que possibilitam mudanças de controle. Este modelo oferece implicações teóricas para a teoria do controle organizacional em MNCs, especialmente em relação à teorização da contribuição da subsidiária no design de controle, reconciliação das tensões criadas nas relações entre matriz e subsidiária e natureza das consequências não intencionais no processo de ajuste. Nosso estudo também contribui para teorias sobre a mudança de MNCs ao detalhar a construção de um alinhamento contínuo entre estratégia e estrutura para flexibilidade estratégica.

摘要

跨国公司(MNC)中的控制问题对国际商务学术理论至关重要。然而, 先前文献倾向于提供静态的观点, 很少提供有关控制变化的理论洞见, 尤其是能够进行控制调整的实践。从实践理论的角度, 我们视控制为 “在制作中”, 因而调整来自于社会成就, 它随着总部和子公司参与共同创造的过程而构成和重构。采用纵向案例研究方法, 我们有难得的机会跟踪和比较随着时间的推移在MNC中调整控制的不成功的和成功的尝试。我们的主要理论贡献是一个在MNC中调整控制的模型, 其中详细介绍了实现控制变化的实践。该模型为MNC的组织控制理论提供了理论启示, 尤其是在控制设计中的子公司的贡献, 总部与子公司紧张关系的调和, 以及调整过程中意外后果的性质的理论化方面。我们的研究还为MNC变化理论做出了贡献, 因为它详细介绍了为实现战略灵活性而不断进行的战略-结构一致性的建设。

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Acknowledgements

We would like to thank Ali Yakhlef, Jan Löwstedt, Ulf Holm, Sinead Monaghan, Shaker Zahra, Olga Petricevic, Yadong Luo, and Maurizio Zollo for their helpful comments on an early draft of this paper. We would like to thank the editor, Klaus Meyer, for his insightful comments and encouragement during the editorial process. We would also like to thank four anonymous reviewers, whose comments were immensely helpful with the development of the paper. Emma Stendahl was previously affiliated with Stockholm Business School and received funding from the Swedish Research School of Management and Information Technology (MIT). Emma Stendahl has also benefited from support by Susi Geiger and the ERC grant agreement No 771217 while working on this article.

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Accepted by Klaus Meyer, Area Editor, 26 August 2020. This article has been with the authors for three revisions.

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Stendahl, E., Schriber, S. & Tippmann, E. Control changes in multinational corporations: Adjusting control approaches in practice. J Int Bus Stud 52, 409–431 (2021). https://doi.org/10.1057/s41267-020-00371-5

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Keywords

  • MNC
  • control
  • change
  • flexibility
  • case study
  • headquarters–subsidiary relationships