Affordable Access

Publisher Website

Differentiated governance of foreign subsidiaries in transnational corporations: an agency theory perspective

Authors
Journal
Journal of International Management
1075-4253
Publisher
Elsevier
Publication Date
Volume
11
Issue
1
Identifiers
DOI: 10.1016/j.intman.2004.11.004
Keywords
  • Transnational Corporations
  • Foreign Subsidiaries
  • Corporate Governance
Disciplines
  • Design

Abstract

Abstract How and to what extent should a transnational corporation's governance structures be differentiated to satisfy varying strategic roles played by foreign subsidiaries? Drawing on an agency theory perspective, we examine the effects of agency problems in the headquarters–subsidiary relationships on the design of corporate governance in transnational corporations. We propose that corporate governance of foreign subsidiaries in a transnational corporation should be constructed in response to different levels of agency problems associated with varying strategic roles of foreign subsidiaries. In addition, we postulate that differentiating governance structures for each foreign subsidiary is a key contingency requirement in order to achieve superior MNE performance as a whole.

There are no comments yet on this publication. Be the first to share your thoughts.