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More effective solutions?
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Research Summary: Solving non-routine problems—problems for which current organizational, recurrent action patterns do not offer a predetermined, effective solution—can be an important source of value creation. When these problems occur in subsidiaries of multinational corporations, senior headquarters managers can potentially help solve them. However, whether their involvement is beneficial rests upon the assumptions that they know which knowledge is appropriate and that their involvement does not negatively influence the problem solving process. We challenge these assumptions and theorize that the involvement of senior headquarters managers is negatively related to solution effectiveness, unless senior subsidiary managers are also involved, and especially if problems have an external locus (i.e., primarily relate to the firm's products and services). Our robust results are consistent with our theory. Managerial Summary: Companies are often faced with new problems, which represent an opportunity for organizational improvements. But how different types of senior managers influence problem solving effectiveness has remained unclear. Studying problems occurring in foreign subsidiaries of multinational corporations, we find that the involvement of senior headquarters managers is negatively related to problem solving effectiveness. Two reasons explain this result: senior headquarters managers often lack necessary understanding of their subsidiaries' contexts; and their involvement diminishes active participation of subsidiary employees. The negative relationship is especially strong when problems relate to products and services (as opposed to internal processes). Furthermore, we find that senior subsidiary managers can mitigate the negative consequences related to senior headquarters managers' involvement.
Descrição
Funding Information: We thank Kyle Mayer and the anonymous reviewers for very detailed and constructive comments. We are grateful to Renate Kratochvil for leading parts of the data collection. This article greatly benefited from discussions with and comments of Tina Ambos, Niron Hashai, Thomas Keil, Marcus M. Larsen, Randi Lunnan, Felipe Monteiro, and Torben Pedersen. We are thankful to seminar participants at Aalto University, ESSEC, Copenhagen Business School, Nova SBE, Stockholm School of Economics, TU Munich, WU Vienna as well as reviewers and participants of the Academy of International Business Annual Meeting for their valuable inputs. Consultants at McKinsey & Company provided important insights related to problem solving in multinational corporations. This study received funding from the Irish Research Council, the European Commission, the Fundação para a Ciência e a Tecnologia (UIDP/00124/2020, UIDB/00124/2020 and Social Sciences DataLab, PINFRA/22209/2016), POR Lisboa and POR Norte (Social Sciences DataLab, PINFRA/22209/2016). Publisher Copyright: © 2023 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd.
Palavras-chave
headquarters-subsidiary relationships multi-unit firms non-routine problems problem solving senior managers Business and International Management Strategy and Management