Control in the multinational enterprise: The polycentric case of global professional service firms

This paper contributes to research on control in multinational enterprises (MNEs) by considering the case of global professional service firms (GPSFs). Drawing on fieldwork in four firms, it argues that GPSFs are seeking greater control over their subsidiaries in order to provide integrated cross-national services to global clients and, in the process, are becoming subject to a center-subsidiary tension similar to that observed in more conventional MNEs. However, and importantly, the paper also argues that the center-subsidiary tension operates differently in GPSFs. This is because central control in this particular context is pursued by not only headquarters but also subsidiaries based in core economies where major global clients are headquartered. Such polycentric control leads to the center-subsidiary tension expressing itself along not just the vertical (headquarters-subsidiary) axis but also the horizontal (inter-subsidiary) one and, in particular, along core-periphery lines. The research and managerial implications of these findings are discussed.