Does Distance to Subsidiaries affect Headquarters Value Added?

Phillip C. Nell, Sjoerd Beugelsdijk, Björn Ambos

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    Abstract

    How does distance between MNC headquarters and their subsidiaries affect the value added generated by headquarters? Integrating theories on spatial transaction costs with the headquarter view of the MNC, we link two types of distances, geographic distance and contextual distance, with headquarters value added. We test our hypotheses on an original dataset of 124 manufacturing subsidiaries in Europe. We find that the relation between distance and headquarters value added is conditional on the degree of subsidiaries’ external embeddedness. We find no direct effect of distance. The value added of headquarters is highest for subsidiaries that are not externally embedded in the host country and that operate at a large distance. It is lowest for locally responsive subsidiaries with high external embeddedness operating at a large distance. We discuss implications for the literature on headquarters-subsidiaries relations and distance research.
    Original languageEnglish
    Title of host publicationProceedings of the 56th Annual Meeting of the Academy of International Business : Local Contexts in Global Business
    EditorsKlaus Meyer, Tunga Kiyak
    Place of PublicationEast Lansing, MI
    PublisherAcademy of International Business
    Publication date2014
    Pages1557
    Publication statusPublished - 2014
    EventAIB 2014 Annual Meeting : Local Context in Global Business - Westin Bayshore, Vancouver, Canada
    Duration: 23 Jun 201426 Jun 2014
    Conference number: 56
    http://aib.msu.edu/events/2014/

    Conference

    ConferenceAIB 2014 Annual Meeting
    Number56
    LocationWestin Bayshore
    CountryCanada
    CityVancouver
    Period23/06/201426/06/2014
    Internet address
    SeriesAcademy of International Business. Annual Meeting. Proceedings
    Volume56
    ISSN2078-4430

    Cite this

    Nell, P. C., Beugelsdijk, S., & Ambos, B. (2014). Does Distance to Subsidiaries affect Headquarters Value Added? In K. Meyer, & T. Kiyak (Eds.), Proceedings of the 56th Annual Meeting of the Academy of International Business: Local Contexts in Global Business (pp. 1557). Academy of International Business. Academy of International Business. Annual Meeting. Proceedings, Vol.. 56 http://aib.msu.edu/events/2014/pdfs/AIB2014_Proceedings.pdf