An Organizational Politics Perspective on Intra-Firm Competition in Multinational Corporations

By Becker-Ritterspach, Florian; Dorrenbacher, Christoph | Management International Review, July 2011 | Go to article overview

An Organizational Politics Perspective on Intra-Firm Competition in Multinational Corporations


Becker-Ritterspach, Florian, Dorrenbacher, Christoph, Management International Review


Abstract:

* Reviewing the International Business (IB) literature on intra-firm competition as well as the more extensive literature on subsidiary mandate change, the paper uncovers that both literature streams so far pay rather little systematic attention to the political dimension of intra-firm competition.

* Taking a micro-political perspective, an alternative framework is developed that helps to identify key actors, their behavioral rationales and the contextual conditions that inform such rationales in intra-firm competition.

* Specifically, we argue that subsidiary managers' ability to mobilize resources (based on their resource exchange relationships) within and outside the multinational corporation (MNC) and their willingness to employ these in favor of the subsidiary (based on their strategic orientation) form an important strategic asset in intra-firm competition.

* Further, we argue that the subsidiary manager's resource exchange relationships and their strategic orientation--in combination understood as different resource mobilization strategies-are informed by their career path, position and aspiration.

Keywords: Intra-firm competition * Organizational politics * Micro-politics * Power Subsidiary manager * Resource mobilization strategies

Introduction

Intra-firm competition is one the most contentious issues in MNCs. The threat to transfer production, R&D or some other tasks and responsibilities to a competing subsidiary triggers intense strategic interactions within the MNC. In cases where such conflicts escalate, political and industrial action follows and often long public debates unfold. In many cases intra-firm competition is unleashed and stimulated by headquarters applying a 'cherry-picking approach' (Geppert and Matten 2006). However, intra-firm competition might also be the result of an individual subsidiary initiative to gain a new or to further develop a mandate it already holds. No matter whether intra-firm competition is unleashed by headquarters or by subsidiary initiatives, it introduces an element of instability into the MNC-wide division of labour that has far reaching implications especially for subsidiaries. From a subsidiary point of view, intra-firm competition implies both chances for a long term upgrading as well as threats for a long-term downgrading of the subsidiary within the MNC network. The condition that subsidiaries can gain or lose 'weight' (Bouquet and Birkinshaw 2008a, b) in intra-firm competition suggests that intra-firm competition has an intrinsic conflict potential. Moreover, it suggests that keeping pace in fierce intra-firm competition is of prime strategic importance for subsidiaries. This is not only to avoid job losses at the subsidiary--an issue that often dominates the public debate--but also to secure future influence and reputation of the subsidiary as well as of its key managers. Key subsidiary managers whose careers, clouts and even jobs might depend on their behaviour and performance in such conflicts play a very important role in intra-firm competition. They negotiate with headquarters managers, form political coalitions within and outside the MNC, cooperate with MNC-internal and external partners, improve given mandates and explore new business opportunities.

Reviewing the literature on intra-firm competition as well as the more extensive literature on subsidiary mandate change, subsidiary autonomy and subsidiary power, however, it turns out that little is known about the political dimension of and sub-organizational actors in intra-firm competition. This gap results from the fact that intra-firm competition so far has been basically addressed by researchers with a contingency theory background. Although they recognize that politics is important in intra-firm competition they fail to adequately integrate the political dimension into their frameworks. This paper tries to address this gap.

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