MNCs’ Intermediate Units and Their Choice of Control Mechanisms

Angels Dasi, Torben Pedersen*, José Pla-Barber

*Corresponding author for this work

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Abstract

This paper analyzes how MNCs’ intermediate units—those that exercise authority over other subsidiaries—apply specific control mechanisms: centralization, formalization, outcome control, and socialization. We combine agency and network theory to explain how intermediate units’ dual agency role—as both principal and agent— and their network embeddedness form the choice of control mechanisms. More specifically, we propose hypotheses on how the intermediate units’ internal and external relationships determine their choice of control mechanism. We study this issue in the context of Spanish intermediate units —owned by European MNCs— that exercise authority over subsidiaries in Latin America.
Original languageEnglish
JournalManagement International Review
Volume64
Issue number1
Pages (from-to)59-88
Number of pages30
ISSN0938-8249
DOIs
Publication statusPublished - Feb 2024

Bibliographical note

Published online: 22 January 2024.

Keywords

  • Intermediate unit
  • Multilayered MNC
  • Control mechanism
  • Agency theory
  • Network theory

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