Academic journal article Management International Review

Beyond Simple Configurations: The Dual Involvement of Divisional and Corporate Headquarters in Subsidiary Innovation Activities in Multibusiness Firms

Academic journal article Management International Review

Beyond Simple Configurations: The Dual Involvement of Divisional and Corporate Headquarters in Subsidiary Innovation Activities in Multibusiness Firms

Article excerpt

1 Introduction

During the last decade, research on the role and function that headquarters play in complex multibusiness organizations such as multinational corporations (MNCs) has been invigorated. Recent contributions have investigated how headquarters attempt to add value to the organization (Nell and Ambos 2013), for example by transferring knowledge to their subsidiaries (e.g., Nell et al. 2016; Parmigiani and Holloway 2011), by enabling the development and the sharing of innovations within the firm (e.g., Ciabuschi et al. 2011a; Dellestrand and Kappen 2012; Un and Cuervo-Cazurra 2004), or by managing inter-divisional conflicts and uncertainty (Poppo 2003).

While this stream of literature has substantially advanced our understanding of headquarters roles and functions (also called parenting activities), it is surprisingly silent on one of the key characteristics of parenting in complex organizations--parenting configurations. Goold and Campbell (2002) are among the first to highlight that parenting in complex organizations usually goes hand in hand with a more complex structure of parenting itself. For example, in complex organizations, parenting activities are often allocated to several headquarters (Alfoldi et al. 2012; Birkinshaw et al. 2006; Nell et al. 2017) or even to subsidiaries (e.g., Centers of Excellence, cf., Frost et al. 2002). Furthermore, complex organizations experience that multiple headquarters simultaneously interact with a particular subsidiary when they attempt to add value. For example, a subsidiary in Japan, engaging in a new innovation project, might simultaneously coordinate its actions with the divisional headquarters for wind turbines in Denmark, but it might also interact and experience involvement from corporate headquarters in the United States.

Current research largely disregards these nested and interdependent headquarters' structures and instead tends to focus on individual headquarters (see Baaij and Slangen 2013; Hoenen and Kostova 2015). This is unfortunate because issues such as matrix structures and complex multiple headquarters organizations seem to re-emerge in many companies (Birkinshaw et al. 2016; Egelhoff et al. 2013; Wolf and Egelhoff 2013). Furthermore, simultaneous linkages between a subsidiary and multiple headquarters can create overlaps of authority and interaction, and maintaining such redundancies is costly (Williamson 1975). For example, the joint venture literature has shown that the involvement of a larger number of parents can have detrimental performance implications for subsidiaries (Gong et al. 2007; Luo et al. 2001) and the matrix literature has emphasized dysfunctional conflicts arising due to several intervening headquarters (Galbraith 2009). Or, as Egelhoff (1988, p. 4) puts it, "dual hierarchies involve more managers and staffs, and since the goals and strategic concerns of the two often concern the same resources, considerable managerial effort has to be put into constructive conflict resolution". Although multiple parenting structures can be harmful for the subsidiaries, we still have a limited understanding of the questions why and under which circumstances firms nevertheless opt for organizing their parenting in such a way.

This article sheds light on the issue of multiple headquarters involvement in the context of innovation development projects hosted by subsidiaries. Drawing on selective hierarchical involvement theory (Poppo 2003) and the literature on subsidiary network embeddedness (Andersson et al. 2002; Meyer et al. 2011), we investigate drivers of divisional and corporate headquarters involvement in subsidiary innovation development processes in terms of the allocation of (managerial) resources to the same innovation development projects. We refer to this phenomenon as "dual headquarters involvement" (Birkinshaw et al. 2016). We use the MNC as our research context and depict such a multibusiness firm as a complex organization with multiple headquarters and subsidiaries that are internally embedded (Meyer et al. …

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