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Effective communication is critical to enable the successful management of a multinational company. Without a shared language, effective communication is impossible. Previous research have not established what the role of language is in establishing strong relationships between subsidiaries and headquarters. It is argued that if effective communication is enabled through the use of a shared language and effective communication strengthens relationships between subsidiaries and headquarters, then a shared language should influence subsidiary headquarter relationships positively. A mixed method approach was used to reflect the perspective from both headquarters and subsidiaries. Questionnaires were distributed to subsidiaries and semi-structured interviews were conducted with executives from headquarters based on the results from the questionnaire. Language was found to have a profound influence on relationships between subsidiaries and headquarters but the extent of the influence varied depending on time, less hierarchical organisational structures and cultural background. Social identity theory suggested groups of ethnically similar people would cluster together and form strong personal relationships, language being one such an ethnic characteristic. The data collected challenged this theory by proving that a company identity can prove to be stronger and more influential over time, surpassing the impact of language and ethnicity. It was also found that a shared language promoted social networks and power within the organisation but that the influence is more prominent when the shared language is the official company language. The research contributed to literature by adding to the current understanding of what influences subsidiary headquarter relationships. The contribution to business is also important as attention is a scarce resource and inter unit relationships are critical to the success of any multinational company. / Dissertation (MBA)--University of Pretoria, 2013. / zkgibs2014 / Gordon Institute of Business Science (GIBS) / MBA / Unrestricted

published_or_final_version / abstract / Geography / Doctoral / Doctor of Philosophy

Multinational corporations face the dilemma of global integration and local responsiveness. Further, they have to contend with trying to minimise agency costs in managing remote subsidiaries. An alternative to regional headquarters was proposed in regional management mandated (RMM) subsidiaries. These subsidiaries are profit and loss units that are delegated headquarters functions to manage peripheral subsidiaries. The study aimed to examine the headquarters-RMM-subsidiary structure through determining whether the RMM-subsidiary was relevant to a multi-business subsidiary with four industry sectors and examining the roles played by the business units within the industry sectors. A qualitative and single-case, exploratory study was conducted, which consisted of twenty-five semi-structured interviews with respondents within the headquarters, the RMM-subsidiary and the peripheral subsidiaries. This research found that the RMM-subsidiary does perform most of the headquarters’ functions for the peripheral subsidiaries and business partners – the performance of which is impacted by the type of business and the channel to market. The performance of these functions further highlighted that each business unit within an industry with the RMM charter plays multiple roles to varying degrees within a given framework and across multiple frameworks, and that the roles are also impacted by type of business and channel to market, local resources and competencies. Peripheral subsidiaries were highlighted as being unimportant, compromising their local responsiveness; however, it was indicated that potentially their role would change as business opportunities dictated. Finally, the deployment of expatriates seems not for purposes of control but to fill resource, knowledge and skill gaps as necessary. This highlighted an alternative to expatriate deployment – the development of staff at the headquarters. This would serve two purposes: equip the individual with knowledge and skills needed in the home country and develop networking and trusting relationships that were found to foster better working ties between the headquarters and subsidiaries. As a result the key components in the HQ-RMM-subsidiary structure are identified as the balance between control and autonomy, RMM-subsidiary roles and networking and trusting relationships, as all three components have a direct bearing on the MNC achieving global integration and local responsiveness. Keywords: headquarters functions, regional management mandated subsidiary, peripheral subsidiary, multi-business multinational corporation, subsidiary roles / Dissertation (MBA)--University of Pretoria, 2014. / zkgibs2015 / Gordon Institute of Business Science (GIBS) / MBA / Unrestricted