Formal and Informal IS Control Mechanisms in Multinational Corporations: A Test of Resource Dependence Theory

Abstract

The management of the Information Systems (IS) function is a complex task, particularly in the case of multinational corporations (MNCs), where installations dispersed across distance, time, and cultures can lead to diverse and incompatible systems across foreign subsidiaries. The need to globally control and coordinate the IS management function is often met with resistance from local IS managers who may perceive corporate standards as intrusive. Resource Dependence Theory argues that control is made easier when a subsidiary unit is dependent on corporate headquarters for critical resources. This study examined the IS management relationship between 54 headquarters-subsidiary pairs spread across 19 countries. While the theory holds up well in the case of dependence, the expected relationship with IS resource availability was not observed. Though there was a significant relationship with the use of informal mechanisms of control and coordination, it was in the opposite direction to what was expected.