THE EFFECTIVENESS OF HEADQUARTERS-SUBSIDIARY RELATIONSHIPS - THE ROLE OF COORDINATION, CONTROL, AND CONFLICT

This study examines the relationship of the effectiveness of the headquarters-subsidiary relationship to 1) the conflict between the headquarters and the subsidiary and 2) two key processes of integration: coordination and control. Specifically, it is hypothesized that the effectiveness of the headquarters-subsidiary relationship is related negatively to the level of conflict and positively to the coordination of both primary and support activities. Furthermore, the use of bureaucratic and personal integrating mechanisms are each posited as being positively related to headquarters-subsidiary effectiveness. To examine the hypotheses. information was collected from 105 foreign subsidiaries in the U.S., representing 14 different countries. Based on the responses of top-level subsidiary managers, coordination of primary activities and personal integrating mechanisms had the expected positive relationship and conflict the expected negative relationship with headquarters-subsidiary effectiveness. No support was found for the expected relationship between effectiveness and the use of bureaucratic integrating mechanisms and the coordination of support activities.