AIB 2012 Conference Proceedings - Academy of International ...

SUNDAY
Recent literature has questioned why multinational corporations (MNC) relocate their headquarters activities
overseas. In this paper, we investigate the consequences of this phenomenon. To do this, we conceptualize the
MNC headquarters activities as an interdependent system, and develop a set of propositions that links
headquarters unbundling and relocation to complexity and rising coordination costs. Moreover, we argue that
the coordination costs are often neglected in the headquarters reconfiguration process. In sum, we provide a
novel perspective on modern MNC headquarters configurations, derive consequences for MNC research, and
develop a model that aims at explaining the stability of such systems. (For more information, please contact:
Phillip C. Nell, Copenhagen Business School, Denmark: pcn.smg@cbs.dk)
Psychic Distance, Control Mechanism and Subsidiary Performance: An Empirical Study of Austrian MNCs
Manfred Fuchs, University of Graz
Beatrix Jöbstl, University of Graz
Mariella Koestner, University of Graz
This study analyses antecedents that influence the performance of subsidiaries in psychically close and
psychically distant countries. It focuses on the impact of control mechanisms between Headquarters and
subsidiaries and how these control mechanisms are determined by psychic distance "effects". The study is
based on the analyses of 28 Austrian MNEs and empirically tests HQ-subsidiary relations in 45 subsidiaries,
differentiated in close and distant subsidiary locations. The major objective is to show how psychic distance and
control mechanisms affect subsidiary performance. Our results show that a high level of psychic distance,
indicating low familiarity with a host country, is positively associated with performance. Additionally, the
mediating effect of control mechanisms provides evidence that subsidiaries located in psychically close host
countries are controlled and integrated more intensively which in turn leads to lower subsidiary performance.
(For more information, please contact: Manfred Fuchs, University of Graz, Austria: manfred.fuchs@uni-graz.at)
Understanding the Construct of Administrative Heritage
Birton Cowden, Saint Louis University
Administrative Heritage has previously been described as a constraint on existing businesses in making strategic
decisions based on their existing configuration of physical assets and the management culture. This article
provides additional items to aid in the understanding of the construct of administrative heritage and why
existing firms make the decisions that they do. Furthermore, this article introduces the concept of administrative
fit to help describe why some firms are constrained by their administrative heritage, while others are not. The
purpose of this conceptual paper is to lay a foundation for several future studies. (For more information, please
contact: Birton Cowden, Saint Louis University, USA: bcowden@slu.edu)
What are the Consequences of Perceived Parent Company Arrogance
Jakob Lauring, Aarhus University
Poul Houman Andersen, Aarhus University
Marianne Storgaard, Kolding School of Design
Hanne Kragh, Aarhus University
Parent companies have a specific status due to size, home market position, and resources that grant them
superiority over their subsidiaries. This superiority is sometimes expressed in situations that subsidiary
employees interpret as arrogance. Such perceptions of parent company attitudes and behaviors could have a
number of negative consequences for the general functioning of MNCs. In this article we argue that perceived
parent company arrogance is an understudied but important subject in MNC management. We illustrate this by
use of four qualitative studies. Our findings show that actions that lead to the labeling of parent company
representatives as arrogant may be categorized as ignoring, by-passing, and educating. By use of social
categorization theory and studies on group dynamics we argue that perceived arrogance could have highly
AIB 2012 Conference Proceedings
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