Institutional and Sectoral Determinants of Headquarters-subsidiary Relationships: A Study of UK Service Multinationals in China, Korea, Brazil and Argentina

What is the nature of headquarters-subsidiary relationships in service multinationals? What factors, including sectoral and national features, affect these relationships? Drawing on a study of eight major UK service multinationals operating in four countries with distinctive institutional environments – China, Korea, Brazil and Argentina – we develop a conceptual framework of the determinants of headquarters-subsidiary relationships in service multinationals. We find that one of the determinants of headquarters-subsidiary relationships is the development by service multinationals of tools for integration and co-ordination, including corporate processes and global supply chain management, which reinforce centralisation. Two additional sets of determinants, however, account for variations among the cases in the autonomy of subsidiaries. A first set of factors relates to the characteristics of the different sectors, including whether the multinational serves global or local customers and the scale and diversity of subsidiary operations. A second includes the influence of institutions and regulations in the host country.