Quotation Kostova, Tatiana, Nell, Phillip C., Hoenen, Anne Kristin. 2016. Understanding Agency Problems in Headquarters-Subsidiary Relationships in Multinational Corporations: A contextualized Model. Journal of Management (JOM) ,


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Abstract

This paper proposes an agency model for headquarters-subsidiary relationships in multinational organizations with headquarters as the principal and the subsidiary as the agent. As a departure from classical agency theory, our model is developed for the unit level of analysis and considers two root causes of the agency problem—self-interest and bounded rationality. We argue that in the organizational setting, one cannot assume absolute self-interest and perfect rationality of agents (subsidiaries) but should allow them to vary. We explain subsidiary-level variation through a set of internal organizational and external social conditions in which the headquarters-subsidiary agency dyad is embedded. We then discuss several agency scenarios reflecting various levels of self-interest and rationality that lead to different manifestations of the agency problem. The proposed framework can inform more relevant applications of the agency perspective in organizational studies and motivate future research.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Management (JOM)
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, INF-A, MAN-A+, STRAT-A, WH-A
Language English
Title Understanding Agency Problems in Headquarters-Subsidiary Relationships in Multinational Corporations: A contextualized Model.
Year 2016
Reviewed? Y
DOI http://dx.doi.org/10.1177/0149206316648383

Associations

People
Nell, Phillip C. (Details)
Hoenen, Anne Kristin (Former researcher)
External
Kostova, Tatiana (University of South Carolina, United States/USA)
Organization
International Business (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
2965 Knowledge management (Details)
5234 Administrative science (Details)
5307 Business and management economics (Details)
5324 Organizational research (Details)
5333 Business management (Details)
5915 Economic geography (Details)
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