The Headquarters-subsidiaries Trench:

The emergence of perception gaps between headquarters and subsidiaries has an important bearing on research practice as well as on managerial issues. This study is among the first to systematically investigate the link between the MNC unit's strategic environment and perception gaps. Evidence was found that certain strategic environments bear a higher risk for perception gaps concerning information flows between headquarters and subsidiaries and the subsidiaries' autonomy. Our results also confirm that tense perception gaps have a negative effect on managers' satisfaction and, thus, pose a threat to the company's operations. Collectively, our findings have an impact on research practice as well as on managerial issues.