Functional Strategy Implementation in Multi-Unit Organizations: Headquarters Intervention and the Role of Intervention Frequency Climate

In organizations that delegate decisions, headquarters may sometimes overrule decisions that subunit managers make based on decision rights that have been granted to them. Such interventions are common and are often argued to be detrimental to the motivation of subunit managers. However, little is known about their consequences for strategy implementation. We introduce the construct of an intervention frequency climate to examine the broader, organization-level functioning of headquarters interventions in the context of strategy implementation. The construct captures the organization-wide headquarters’ intervention behaviour instead of the dyadic perspective that has dominated previous research on headquarters intervention. We highlight intervention frequency as a relevant dimension and argue that a climate of high intervention frequency may be perceived positively by subunits. In contrast to earlier research, which has emphasized the adverse effects of interventions, we argue that a high intervention frequency climate is thus positively associated with subunit strategy implementation. Using a multi-level study over two periods of time, we find robust support for our hypotheses that a high intervention frequency climate is associated with subunit strategy implementation.