The role of national culture in the headquarters-subsidiary relationship in the multinational corporation: the effect of power distance
2010 (English)In: Managing the Contemporary Multinational: The Role of Headquarters / [ed] Ulf Andersson and Ulf Holm, Cheltenham: Edward Elgar , 2010, 254-280 p.Chapter in book (Other (popular science, discussion, etc.))
In this chapter we study how national cultural differences affect the managerial relationship between MNC headquarters and their subsidiaries. We argue that the headquarters and their subsidiaries have cultural characteristics deriving from the countries in which they are based that matter to headquarters’ management of their subsidiaries. Furthermore, it is not just the cultural distance that affects the headquarters-subsidiary relationship, but the actual cultural characteristics of both parties. We investigate this empirically, focusing on how both headquarters and subsidiary positions on the cultural dimension of power distance (the acceptance of unequal distribution of power in a society) relate to headquarters’ influence on the competence development of the subsidiary. Our dataset is comprised of 1552 subsidiaries in six European countries and their corresponding headquarters in 27 countries distributed throughout the world. ANCOVA analysis shows that the headquarters exerted the greatest influence when both the headquarters and its subsidiary belong to national cultures with a high power distance. Findings also show that headquarters’ influence is more dependent upon the subsidiary’s grade of power distance acceptance than on that of headquarters. Our findings confirm that the cultural distance metaphor should be replaced with a concept that does more justice to the actual cultural interface in a managerial relationship.
Place, publisher, year, edition, pages
Cheltenham: Edward Elgar , 2010. 254-280 p.
Research subject Business Studies
IdentifiersURN: urn:nbn:se:uu:diva-110385ISBN: 978-1-84844-807-0OAI: oai:DiVA.org:uu-110385DiVA: diva2:276977