Subsidiary power in multinational corporations: the subtle role of micro-political bargaining power

Abstract

Purpose As subsidiary power has received relatively little attention in existing research, this paper aims to enhance the understanding of genuine sources of subsidiary power and how they work in headquarters-subsidiary relationships. Design/methodology/approach The paper is based on a review of the relevant literature and four illustrative case studies, which are written on the basis of secondary sources. Each case was selected because it adequately represents a particular type of power. This allows for cross-case comparisons of the strengths and sustainability of different types of power, and facilitates the exploration of the application of subsidiary power in headquarters-subsidiary relationships. Findings Four genuine types of subsidiary power are identified. One of these – micro-political bargaining power – plays a subtle but crucial role, as it is important in the enactment of the three other types of power, i.e. systemic, resource-dependency, and institutional. Practical implications As headquarters have unlimited access to formal power, subsidiaries find it necessary to constantly apply micro-political bargaining power. The empirical material suggests that the effectiveness of micro-political bargaining power for subsidiary actors is based on two factors: information retrieval from headquarters and the leveraging of such information in issue-selling or conflict-handling processes. Originality/value The paper contributes by theoretically delineating genuine types of subsidiary power and by illustrating the strength, sustainability and interaction of these types of power in headquarters-subsidiary relationships.