How to Manage Subsidiaries’ Local Sales Activities During the External Crises? A Case Study of Headquarters Control and Subsidiaries Autonomy in Chinese MNC Under the Covid-19 Pandemic Context

Abstract

The relationship between MNC headquarters and subsidiaries has always been the focus in the field of international business. For MNCs, how to manage and coordinate the relationship between headquarters and subsidiaries, especially under the dramatic changes in external environment, how the headquarters can effectively manage subsidiaries local activities is very important. This research aims to discuss the headquarters-subsidiary relationship and management from two perspectives: the headquarters control and subsidiaries autonomy, and how headquarters should balance them under the Covid-19 pandemic context. A small Chinese MNC was selected for the case study, and its sales activity management is the focus of this research. The case study was conducted through semi-structured interviews with three respondents from the headquarters, and two sales offices located in China and Malaysia. The findings indicate that under the dramatic changes in external environment, MNC headquarters prefer to adopt more centralized management and control over subsidiaries and reduce their decision-making autonomy. MNC headquarters will mainly adopt formal control mechanisms to coordinate and control the sales activities of subsidiaries. However, the informal control mechanisms are also worthy of attention and consideration. In balancing control and autonomy, headquarters should consider differences in the institutional environment, the subsidiaries external network embeddedness, and the subsidiaries dependence on headquarters resources.