Does Distance to Subsidiaries affect Headquarters Value Added?

Phillip Christopher Nell, Sjoerd Beugelsdijk, Björn Ambos

    Research output: Contribution to conferencePaperResearchpeer-review

    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
    Publication date2014
    Number of pages26
    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

    Bibliographical note

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    Cite this

    Nell, P. C., Beugelsdijk, S., & Ambos, B. (2014). Does Distance to Subsidiaries affect Headquarters Value Added?. Paper presented at AIB 2014 Annual Meeting , Vancouver, Canada.