Headquarters-subsidiary relationship governance in Poland

Abstract

The study addresses the views of agency and stewardship theory on governance of the relationship between headquarters and subsidiaries. It explores the influence of strategy, task environment and cultural differences on this relationship. The conceptual model is explored based on a survey of 76 polish subsidiaries of multinational enterprises (MNEs) from 12 countries using partial least squares. The results show that the agency and stewardship mechanisms are used alongside each other, and are complementary. Agency mechanisms provide the platform on which stewardship mechanisms are built. Unexpectedly, the international strategy of the MNEs does not appear to influence the effectiveness and choice of the governance mechanisms. It is concluded that MNEs should recognise contextual and cultural differences in designing the headquarters-subsidiary governance.