HQ controls, agency costs, and procedural justice

IF 5.7 2区 管理学 Q1 BUSINESS Global Strategy Journal Pub Date : 2023-02-27 DOI:10.1002/gsj.1473
Erifili-Christina Chatzopoulou, Spyros Lioukas, Irini Voudouris
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Abstract

Research Summary

Monitoring, incentive alignment, and social controls are used to minimize the agency costs to headquarters (HQ) resulting from subsidiaries' opportunistic behaviors by aligning subsidiaries' behaviors and interests with those of the HQ. Subsidiaries' motivation to comply with these controls, however, is contingent on the social context that links the subsidiary to the HQ. In this context, we propose to identify procedural justice as a motivational contingency that shapes the conditions under which agency-driven controls can effectively minimize agency costs. Our results show that monitoring and social control reduce agency costs when procedural justice is high, whereas the use of incentive alignment mechanisms can have the opposite effect.

Managerial Summary

The headquarters (HQ) of multinational corporations use control mechanisms to ensure the alignment of their subsidiaries with the organization's interests and goals. However, these mechanisms do not always provide value to the corporation since subsidiaries may exhibit varying levels of motivation to comply with such controls, resulting in behaviors that range from resistance to compliance and ceremonial compliance to genuine compliance. We argue that the procedural justice applied by the HQ influences subsidiaries' motivation to comply with the controls implemented by the HQ. We find that in subsidiaries that operate in such a climate of fairness, monitoring based on rules, processes and procedures as well as social control can provide value, whereas the use of incentive alignment can lead to the opposite results.

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总部控制、机构成本和程序公正
研究摘要 通过监督、激励调整和社会控制,使子公司的行为和利益与总部保持一致,从而将子公司的机会主义行为给总部造成的代理成本降至最低。然而,子公司遵守这些控制措施的动机取决于将子公司与总部联系在一起的社会环境。在此背景下,我们建议将程序正义视为一种动机权变,它决定了在何种条件下,代理驱动的控制能够有效地将代理成本降至最低。我们的研究结果表明,当程序公正性较高时,监督和社会控制会降低代理成本,而使用激励调整机制则会产生相反的效果。 管理总结 跨国公司的总部(HQ)使用控制机制来确保其子公司与组织的利益和目标保持一致。然而,这些机制并不总能为公司带来价值,因为子公司可能会表现出不同程度的遵守这些控制的动机,从而导致从抵制遵守、仪式性遵守到真正遵守的各种行为。我们认为,总部实施的程序正义会影响子公司遵守总部控制措施的动机。我们发现,在这种公平氛围下运营的子公司,基于规则、流程和程序以及社会控制的监督可以提供价值,而使用激励调整则会导致相反的结果。
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来源期刊
CiteScore
14.20
自引率
11.80%
发文量
46
期刊介绍: The Global Strategy Journal is a premier platform dedicated to publishing highly influential managerially-oriented global strategy research worldwide. Covering themes such as international and global strategy, assembling the global enterprise, and strategic management, GSJ plays a vital role in advancing our understanding of global business dynamics.
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