Corps de l’article

The present study is in response to the call to re-examine the role played by corporate headquarters (HQ) in the multinational enterprise (MNE) network in the context of the globalized marketplace (Beugelsdijk et al., 2017; Reichstein-Scholz et al., 2021). The increasing number of international customers, suppliers and competitors illustrates the globalization of the markets (Birkinshaw et al., 2006; Malnight, 1996). With the growing interdependence of external business networks, MNEs experience greater pressure to align their business activities across different foreign markets (Narula, 2014; O’Donnell, 2000). High interdependence between MNE subunits (headquarters and subsidiaries) affects the roles and power relationships at play (Sinkovics et al., 2011). In view of all this, this study addresses the following research question: what is the role of corporate headquarters in the management of multiple (external and internal) network interdependencies in the context of international sales activities?

Recent research has outlined the importance of considering internal and external networks simultaneously (Dellestrand et al., 2023; Donada et al., 2020; Melin, 2014; Santistevan, 2022). This paper adopts the dual network perspective and extends the conceptualization of the role of corporate headquarters in MNE network coordination at the firm level through an analysis of dual network interdependencies.

The external network of the MNE comprises customers, suppliers, competitors, institutions, and other actors (Forsgren, 2008). Relationships with customers are viewed as critical to the success of the activities of the MNE. The context of international sales activities is well-suited to study the challenges of MNE network coordination: management of customer relationships and associated cross-border projects requires that the MNE both manages its multiple embeddedness across various foreign markets and coordinates the interdependent activities of its subsidiaries (Birkinshaw et al., 2001; Nell et al., 2011). As such, the present study contributes to the analysis of international sales activities (i.e., international customer network management), an area little covered in previous IB studies (Donada et al., 2020; Reichstein-Scholz et al., 2021).

From the internal network perspective, previous research has mainly considered the corporate HQ through its dyad relationships with subsidiaries (Nell et al., 2017). Little attention has to date been paid to the multiple network context in HQ-subsidiary research (Kostova et al., 2016). The originality of the present study is its investigation into the role of corporate headquarters in aligning the activities of multiple MNE subsidiaries, i.e., its analysis of multilateral inter-subsidiary interdependencies in the management of international sales activities.

The multiple case study research was conducted with three MNEs operating in specialized markets in the B2B sector. The remainder of this paper is set out as follows. We first present the theoretical underpinnings of the study before explaining the methodology used for our empirical investigation. We then analyze and discuss the findings. The implications for IB literature and practitioners are explored in the concluding section.

Theoretical framework

The literature review was conducted to provide a better understanding of the interdependence of MNE subunits, and the role of headquarters in coordinating externally embedded MNEs.

The role of Headquarters in the MNE network

The MNE can be seen as a business network (Bartlett & Ghoshal, 1989; Forsgren, 2008) comprising different subunits (headquarters and subsidiaries), which are in turn embedded in larger inter-organizational business networks (Vahlne & Johanson, 2013). One of the challenges for the modern MNE is the successful management of multiple intra- and inter-organizational networks (Forsgren, 2016).

The network perspective highlights the important role of subsidiaries in business network development (Amann et al., 2017; Nell et al., 2010). Furthermore, the external network of the subsidiary is the source of its decisive power within the MNE (Forsgren, 2008). Thus, the HQ is considered ‘one player among others’ (Forsgren, 2008, p. 146) in the fight for control over strategic decisions within the MNE network (Andersson et al., 2007; Ciabuschi et al., 2012).

As argued by Birkinshaw et al. (2017), “this tension is typically resolved through corporate HQ adopting a less dominant role than in the past, with executives focusing on orchestrating resources and on enabling subsidiary units to develop their unique capabilities and to work effectively together” (p. 426). This statement resumes the observations of several other studies. Thus, some scholars perceive the HQ as an ‘orchestrator of resources’ (Dellestrand & Kappen, 2012; Foss & Pedersen, 2002), integrator of intra-organizational knowledge flows (Ciabuschi et al., 2017; Mudambi & Navarra, 2004; Su et al., 2023) or refer to the role of the HQ in diffusing subsidiary initiatives (Dörrenbächer & Gammelgaard, 2016; Williams & Kumar, 2022), and coordinating the firm’s internal business activities (Chiao & Ying, 2013). Hereafter in this paper, ‘coordination’ refers to integration between interdependent subunits to achieve common organizational objectives (Grillat & Mérignac, 2011; Harzing, 1999; Vahlne et al., 2011; Vahlne & Johanson, 2021).

From the network perspective, MNEs are characterized by the increasing importance of direct lateral collaboration and the HQ role of moderator (Beddi, 2011). Meanwhile, other scholars have argued the need for more significant HQ involvement in modern MNEs. The HQ’s ability to consolidate the information and move decision-making away from the different subsidiaries to a higher level, for a more optimal firm-level perspective, is emphasized (Egelhoff, 2010; Egelhoff & Wolf, 2017). Vahlne et al. (2012) argue that the HQ’s role implies the preservation of strategic firm-level goals and the related allocation of resources. Other scholars have defined the role of the HQ as that of a ‘referee’, legitimizing and supporting the most competitive initiatives generated by subsidiaries (Ambos & Birkinshaw, 2010; Bouquet & Birkinshaw, 2008; Narula, 2014).

The literature does not present a consensus, and indeed reflects the complexity of the HQ’s role. Furthermore, the context of globalizing markets calls for a re-examination of the HQ role in contemporary MNEs: “in the face of continuing globalization, MNCs worldwide struggle with (re-) positioning their headquarters in the overall MNC network” (Beugelsdijk et al., 2017, p. 263). Market globalization implies the interdependence of MNE multiple subunits. Surprisingly, very few studies have considered the multilateral relationships of MNE subunits (Ho, 2014; Santistevan, 2022). Moreover, previous research on collaborative activities between MNE subsidiaries has mainly focused on Research & Development (R&D) and production activities (e.g., Hurtado-Torres et al., 2018; Reichstein-Scholz et al., 2021). The present research focuses on the management of international sales activities, considered as crucial for the growth of the company’s business (Forsgren, 2008).

Interdependence of MNE subunits in international sales activities

Growing numbers of multinational customers operate globally and influence the focal MNE beyond one foreign market (Birkinshaw et al., 2001; Nell et al., 2011). This phenomenon has an important impact on the organization and coordination of the MNE (Birkinshaw et al., 2001; Hui Shi et al., 2010). The call for stronger MNE integration has been generated by customers’ demands to manage more and more issues on an increasingly global basis with their suppliers (Birkinshaw et al., 2001; Egelhoff, 2010). This outlines the need to strengthen collaboration among MNE subunits to better satisfy the expectations of multinational customers. Furthermore, the competitive position of the MNE in one foreign market is dependent on its network positions in other markets (Zou & Cavusgil, 2002).

Inter-country coordination (i.e., internal coordination), inter-organizational coordination (i.e., with customers), standardization of marketing activities, and following the costumer into various countries, are defined as the key determinants of supplier MNE performance (Hui Shi et al., 2010). Inter-country coordination includes the alignment of all functional activities across MNE subunits. Birkinshaw et al. (2001) point to the development of a customer-focused MNE organization, wherein multinational customers are served worldwide, with centralized coordination conducted by one person or a team within the supplier MNE (Hui Shi et al., 2010; Senn et al., 2013). The multinational customer relationship management also requires closer involvement of senior-level executives (Odlin & Benson-Rea, 2017; Toulan et al., 2006). The importance of effective knowledge sharing across MNE subunits is also emphasized, with a view to better satisfy the demands of multinational customers for global solutions (Birkinshaw et al., 2001; Montgomery & Yip, 2000).

The development of an international customer network implies managing relationships with direct customers, but also with other external network actors interlinked with the direct customers of the MNE (e.g., customers’ customers and partners). The literature has remained relatively silent in this regard. In both cases, business network relationships require successful management across multiple foreign markets, and this depends on the effective alignment of multiple MNE subunits (O’Donnell, 2000; Hui Shi et al., 2010). In light of the above, this study seeks to provide further empirical evidence on the nature of external customer network interdependencies, multilateral inter-subsidiary relationships in managing cross-border activities and, based on this, seeks to reexamine the role of the corporate HQ in managing multiple network interdependencies in the context of international sales activities.

Methodology and characteristics of case-studies

Data collection

We conducted qualitative case study research in order to gain insight into complex and context-specific phenomena (Yin, 2014). The complexity of the studied phenomenon lies in the interdependence of multiple actors, across both internal and external business networks. The cross-border nature of the network activities studied also calls for a qualitative approach (Ghauri, 2004). Given the limited empirical investigation of international sales activities in the literature (Reichstein-Scholz et al., 2021), we use a multiple case study approach to provide a more in-depth understanding of these strategic activities (Yin, 2014).

In the case selection process, we looked for companies engaged in cross-border customer network activities. We therefore focused on MNEs which operate in specialized market segments in the B2B sector. Selected companies had to be independent, long established, and internationally oriented. In addition, to minimize the industry effect, we decided to focus on firms from traditional industries. We selected three multinational companies, renamed Alpha, Beta and Gamma for reasons of confidentiality, all located in the French Rhône-Alpes region. Company Alpha is a major player, both in France and abroad, in the field of design and construction of industrial facilities for raw material transformation. The commercial strategy of Alpha is based on offering tailor-made integrated solutions, from design engineering to site construction and maintenance. The company successfully developed unique expertise which is recognized by worldwide actors such as Danone, L’Oréal and Pfizer. Company Beta manufactures and commercializes a specific type of industrial textile: an intermediate product sold to manufacturers which use it in their final products, tent manufacturers, for example. Beta is currently one of the market leaders in the international arena within certain market segments, such as major construction projects for Olympic Games worldwide. Company Gamma is a first-tier supplier in the automotive industry. It develops and commercializes a specific type of spare part for engines, serving the world’s leading car manufacturing companies including Ford, General Motors, Volkswagen and Stellantis.

The three case firms all work with multinational customers. In addition, Beta works on different kinds of international opportunities in ‘architecture’ and ‘furniture’ markets, when the project is carried out in one country, however, negotiation and product promotion are conducted in several other foreign countries with different external actors, which influence (or participate in) the customer’s project. In contrast to working with the different entities of a single multinational customer, network relationships in such projects will be managed with different external actors across multiple foreign markets. The key characteristics of the firms studied are presented in Table 1.

Our research design addresses the call for an analysis of multiple subsidiaries within a single MNE (Athreye et al., 2014; Boussebaa, 2015). We conducted interviews with executives and managers on both corporate and subsidiary levels, and with managers on several organizational levels. Previous studies revealed the importance of lower-level managers regarding intra-firm collaboration issues (Beddi, 2015; Boussebaa, 2015), for example, global key account managers. A total of 34 in-depth semi-structured interviews were conducted in three case firms (Table 2).

Table 1

Characteristics of case study firms

Characteristics of case study firms

* We studied one Strategic Business Unit of Alpha.

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Table 2

Data collection: interviews

Data collection: interviews

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Interviewees were asked a set of open-ended questions concerning the identity of the MNE/subsidiary, the company’s international customer network development, and internal network coordination (see Appendix 1). Each interview was registered and transcribed. We also collected companies’ internal documents and press releases for data triangulation (Miles & Huberman, 1994).

Data analysis

The data analysis process was based on two key steps: the creation of analytic codes and themes, and the theoretical elaboration (Gioia et al., 2013). We conducted content analysis using Nvivo for systematic data examination. Figure 1 resumes how we moved from the initial codes to aggregated dimensions for further theoretical conceptualization of the findings.

The first step of data analysis was based on an inductive approach. Multiple 1st order codes emerged from the data. These were first represented with the words of the respondents, then later reformulated with stronger conceptualization due to very different examples from multiple cases with diverse activities. Certain other codes were merged. This helped us to reduce the number of codes and identify the most relevant issues for further conceptualization. Along with common concepts, new codes emerged (e.g., ‘diffused decision-making on the customer side’, ‘coordination of collective activities with selective customers’).

Figure 1

Data structure

Data structure

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The next step of the data analysis, drawing on an abductive approach, generated the second level of data abstraction. We constantly compared the data both across the three cases and with the previous literature. Some 2nd order themes matched previous literature (e.g., ‘customer demand’, etc.), while others - contributing novelty to the conducted research (e.g., ‘interdependencies between customer network actors across borders’, ‘collaborative tensions among multiple subsidiaries’, etc.). Through further theoretical abstraction we derived the final aggregated dimensions resuming the research question and representing our contribution to the theory about the nature of inter- and intra-organizational interdependencies and firm-level coordination of cross-border activities, with a focus on the role of corporate headquarters in the management of multiple network interdependencies.

The first aggregated dimension outlines the context of market globalization given the growing interdependence of customer business actors worldwide. This contributes novelty to the research, exploring business network management patterns beyond direct customer-supplier relationships and across multiple foreign markets. The second aggregated dimension refers to the interdependence between MNE subunits and focuses on multilateral intra-firm relationships. This draws particular attention to the nature of collaborative tensions among multiple subsidiaries of the vendor MNE. Finally, we cross-examined the evidence on the coordination of external customer network interdependencies and the management of multilateral inter-subsidiary relationships and investigated when coordination was carried out by the corporate HQ or delegated to core subsidiaries.

Analysis of results

The following presentation of the findings reflects the data structure of the empirical study conducted.

Multiple external customer network interdependencies

The study initially enabled us to examine the nature of external customer actor interdependencies across multiple foreign markets. Table 3 presents the evidence from our three case studies. Some types of customer actor interdependencies were not observed in Alpha nor Beta. This illustrates the differences in external network structures in diverse market segments, nevertheless providing valuable insight for further conceptualization of MNE dual network coordination based on common patterns of the three cases studied.

Table 3

Interdependencies between customer actors across foreign markets: evidence from three case studies

Interdependencies between customer actors across foreign markets: evidence from three case studies

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The three firms studied work with multinational customers in a way which can be more or less centralized. The interviews outline the key role of the vendor MNE HQ in establishing long-term collaborative relationships with the customer’s HQ: “[The Executive director] spends quite a bit of time coming over twice a year to visit their corporate office. By investing senior resources into the relationships, we forge trust.” (Sales director, USA, Alpha).

The subsidiaries of multinational customers can also be interlinked to varying degrees. See Appendix 2 for illustrative quotations. For example, the subsidiaries of supplier Alpha work on the manufacturing plant construction projects of their multinational customers: they work independently with different customer subunits, but the customer’s satisfaction depends on the successful completion of each project. A contrasting example is the case of Gamma’s customer, Fiat. All customer subunits made a ‘group decision’ while choosing a supplier for the global purchasing of spare parts. The corporate HQ and several subsidiaries of the supplier Gamma are strongly related as a result of the collaborative negotiation in the course of that project. These and other observations discussed below illustrate how the interdependencies of (external) customer actors impact the interdependencies between the vendor MNE subunits on the intra-firm level and their coordination (Mayrhofer, 2011).

The interviewees also outlined the importance of mergers and acquisitions (M&A) between customers as another type of external network interdependencies to manage. This arguably influences who plays the role of key decision-maker within the customer firm and may result in the involvement of new vendor MNE subunits in customer relationship management across borders.

One of the problems we had was when Geely, a Chinese company, bought Volvo. We had contacts with Geely in China, but Volvo… there was no real reason for us to look after this customer. And all of a sudden, Volvo is very much involved in the development of things in China. […] Very quickly, we had to go, to try to meet the people and try to form a relationship with them.

Sales director, HQ, Gamma

Another situation observed was when two customers from different foreign markets became interlinked through subcontractor relationships, as was the case of Beta. The vendor MNE then faces a new challenge of price transparency between their two direct customers.

The findings also provide evidence about complex cross-border projects with the involvement of a (multinational or local) customer and other third network actors in a project. Thus, in the ‘architecture’ industry, Beta needs to build and develop relationships with multiple interdependent external actors such as the general contractor (and their subcontractor, if necessary) as well as with architects and designers, to gain a given specific project. We take the example of a football stadium in Qatar.

First, you have the international architects’ offices that you might build relationships with. Populus is very well-known for stadiums. We might be in contact with them in the UK for a project in Qatar […] The next one will be the general contractor, a company like Vinci, Bouygues, they will build the stadium […] And then we also have some confectioners. They will buy the raw materials from Beta, and then they will cut the material to size, based on the instructions of the engineering office […] So, that requires a lot of communication and project management because different people are involved.

North area manager, HQ, Beta

The example of the football stadium project illustrates the importance of coordination of negotiation and product promotion activities across different foreign markets (‘international specification activities’, to use the words of the interviewee). Beta subsidiaries notably appreciate the fact that HQ coordinates collaborative specification activities.

For the stadium projects, we have a market manager in France. We work with this lady for special projects when we need her assistance with specifications. Because some of the project specifications are not carried out in India, maybe they are done in Singapore or maybe in Australia, maybe in the US. So, we coordinate with her for the specification part.

Country manager, India, Beta

Relationships with the customers of customers are also regarded as very important by Beta, a company which sells intermediate products. For example, Beta makes prescriptions for end users in Australia, while selling its product to tent manufacturers in Germany, which in turn export their tents to the Australian market: “If you find tent producers deliver to Australia, they are obliged to buy our material. Because the customer said: ‘only Beta’s products’ That’s a very positive point. We had provided perfect specifications in the past” (Senior business development manager, Germany, Beta).

The findings provide a large picture of complex cross-border projects and illustrate the active role of the HQ in managing interdependent relationships with customer actors and in coordinating collective activities of vendor MNE subsidiaries.

Intra-organizational network interdependencies

This study enabled us to analyze the multilateral intra-firm relationships within supplier MNEs. We further discuss the nature of interdependences and possible collaborative tensions among of MNE multiple subsidiaries.

Interdependencies of multiple MNE subsidiaries

Interdependencies among vendor MNE subsidiaries in international sales activities concern different aspects of customer relationship management. Firstly, in most market segments, multinational customers become increasingly integrated. This creates the increasing need for the vendor MNE subunits to align their strategic decision-making, e.g., in terms of global customer strategy and global product/service solutions. It secondly involves the alignment of subsidiaries in terms of quality and prices, as commonly discussed in the literature (Birkinshaw et al., 2001; Montgomery & Yip, 2000; Hui Shi et al., 2010). The quality reputation is perceived as a competitive advantage and affects the firm’s integration (Fan et al., 2012).

Some of our big competitors, such as GA or Tetra, they are much bigger than us […]. The problem they face is that they cannot guarantee to a global company such as Danone that the quality of the project they will deliver will be the same in Russia, or in Africa, or in North America.

Danone global key account manager, HQ, Alpha

The coordination of such activities involves the relationships of pooled interdependence among the vendor MNE subsidiaries, i.e., when subsidiaries perform their activities independently, but the final satisfaction of the customer depends on the contribution of each subunit (successful realization of each local project) (Thompson, 1967). In the above-described example, Alpha works with the different subunits of the multinational customers on a country-by-country basis because customer subsidiaries are independent in their construction projects. This suggests that the individual interests of Alpha subsidiaries are linked indirectly to the collaborative goals of Alpha. Similar observations of pooled interdependence in managing cross-border collective activities are made in all three case firms. As an exception, in the case of Gamma, several subsidiaries are strongly interlinked to negotiate global projects with certain specific customers like Fiat. This evokes a discussion on the mutual interests of Gamma’s subsidiaries.

Another common example is when one subsidiary controls the relationships with the global decision-makers of the customer, and is solicited to support the negotiation of sister subsidiary projects (Beddi, 2012; Boussebaa, 2015; Millman, 1996). This implies the dependence of one subsidiary on another: “we cannot succeed at Nissan in Mexico if we do not get help at Nissan in Japan” (Country manager, USA, Gamma).

One more situation, that has received less exposure in previous research, concerns the renegotiation of contracts with a change in the key decision-makers on the customer side due to M&A among customer actors (observed in cases Beta and Gamma). In the example discussed above, regarding the acquisition of Volvo by Geely (Gamma), the collaboration on those network activities implies the sequential interdependence of Gamma’s subsidiaries (Thompson, 1967): one subsidiary is involved in the prescription/negotiation of another subsidiary’s project, i.e., one subsidiary must accomplish the task before another subsidiary can finalize the project.

Next, in situations when the customers of customers or other partners (architects, designers, etc.), which influence the customer’s decision, are geographically dispersed worldwide, several vendor MNE subsidiaries are required to collaborate through interdependent activities of negotiation and product prescription (see the above example of the stadium construction project in Qatar by Beta). Support provided in networking and negotiation implies the sequential interdependence of Beta’s subsidiaries (Thompson, 1967). Such sequential interdependence is subject to stronger potential conflicts of interests: “for example, our furniture expert, here in the US, is responsible for the specification of around 20% of sales in Asia in that market segment. So, his bonus is linked to that” (Country manager, USA, Beta).

Finally, strong interdependence among multiple subsidiaries of the vendor MNE is explained by their partial knowledge about geographically dispersed customer actors.

We cross-check the information we have. So, people locally can send some information about the project. We can inform them on the status in terms of budget. Is the budget validated by the [customer] HQ? If no budget has been validated, it is not necessary to spend thousands of hours quoting on the project if you are not sure it will be launched.

Director of the ‘Food’ divisional subunit, HQ, Alpha

To conclude, the cross-case analysis emphasizes how collaborative cross-border sales activities imply the pooled or sequential interdependence of the vendor MNE subsidiaries, and rarely their mutual interests.

Collaborative tensions among multiple subsidiaries of the vendor MNE

The complex nature of multilateral intra-firm relationships explains the nature of collaborative tensions observed within the studied firms. The evidence from the three companies is provided in Table 4.

As largely discussed in the literature and observed in all three firms studied, the vendor MNE has to deal with the conflicts regarding the prioritization of firm-level opportunities which may overlook the interests of individual subsidiaries (Mudambi & Navarra, 2004; Oehmichen & Puck, 2016). In Gamma, the HQ seeks to define firm-level priorities with a view to helping each subsidiary/region meet their individual objectives: “I basically come up with a list, which says what are the projects we need to complete this year. And then you divide them by regions, Europe, Asia, the Americas, to make sure that each of the regions will achieve their targets” (Sales director, HQ, Gamma).

Table 4

Collaborative tensions in the management of interdependent business activities

Collaborative tensions in the management of interdependent business activities

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Another common theme arising from the data concerns the individual financial performance interests of subsidiaries which create a barrier to inter-subsidiary collaboration (Boussebaa, 2015).

You can imagine, if our team in England starts working with the architects, with the engineering office, but at the end of the day they don’t get the business, because the business will be purchased from Russia or from Turkey … this could generate a bit of frustration because they essentially get the job done but don’t receive the credit for it.

North area manager, HQ, Beta

The analysis of collaborative tensions from the HQ-multiple subsidiary perspective enables us to make some conclusions. One notable consideration is that the support between subsidiaries is not always reciprocal, e.g., unidirectional support in project negotiation from several other subsidiaries of Beta for sales in Qatar. The firm-level coordination among interdependent subunits calls for a balance in exchanges and support for successful collaboration: “there are some projects which have been developed and are now given to the German teams which were initiated maybe in the UK, maybe in the US, maybe in Poland. And, on the other side, there are projects initiated in Germany which are completed in Italy, or in Poland” (Country manager, Germany, Beta).

The findings of cross-case analysis also outline how multiple MNE subsidiaries face the challenge of working without hierarchical links, and the consequent difficulty to determine the contribution of each subunit to the cross-border project: “you always have to struggle, where do I have my resources for the project? Is it a local project? a global one? Do you have one person with the ability to drive the local organization, while not having an authoritative or hierarchical link to them?” (Marketing director, HQ, Gamma). The collaborative tensions observed outline the importance of having an overview of the whole MNE network to better understand the needs and challenges of MNE network coordination.

The above reasoning on both the interdependence of geographically dispersed external customer actors as well as the need for alignment among multiple MNE subsidiaries on the intra-firm level provides a foundation for further discussion on the role of HQ in managing multiple network interdependencies.

Firm-level coordination of multiple network interdependencies

The three case studies presented herein outline the importance of the firm-level coordination of cross-border sales activities, carried out by the corporate HQ, on the one side, and by certain core subsidiaries, on the other side.

Coordination by corporate HQ

The analysis here particularly highlights the role of HQ in managing external customer networks and in coordinating subsidiaries’ collective activities. First, as described above, the HQ provides important support in top-to-top management negotiation with the external network actors (Hui Shi et al., 2010; Toulan et al., 2006). Second, in all cases studied, the importance of HQ’s role in orchestrating relationships with customer actors from a firm-level perspective is also outlined: “that’s the role of the market managers [based in HQ], to coordinate. Let’s take, for example, a project initiated by a British architect office, but which will be produced through a German confectioner for installation in Qatar. Here, you can only solve this through the market manager, they will be the one person who is aware of the global project” (Country manager, Germany, Beta). These observations argue for the direct involvement of the HQ in managing external customer networks.

The second line of reasoning relates to the role of HQ in managing internal network interdependencies. Indeed, in all cases, and in line with the previous literature (Egelhoff, 2010; Vahlne et al., 2012), prioritization of business opportunities calls for HQ arbitration. This can be explained by the fact that sales activities rarely imply mutual interests of subsidiaries: “when you have all these opportunities, the director of a US subsidiary and directors of divisional subunits [HQ] have to get together and say ‘ok, what is the overall greater good? Because we can’t do everything. What’s the biggest opportunity for Alpha as a whole?” (Sales director, USA, Alpha).

The present study places particular attention on the role of the HQ in managing collaborative tensions among subsidiaries. Thus, in the above-discussed example of international project negotiation (‘international specifications’) activities in case of Beta, the subsidiary calls for a higher level of centralized coordination. The ‘one-to-many’ collaboration form is more difficult to put in place due to the lack of reciprocity in network activities and lack of hierarchical links among subsidiaries. The three firms studied promote the corporate culture of collaboration and sharing (Harzing, 1999), but more importantly, it is observed that the HQ’s commitment to supporting subsidiaries helps to compensate the non-reciprocal nature of direct-support relationships between subsidiaries: “We need to ensure that when we need our corporate office for any given reason, for questions on products, marketing or logistics, we need to make sure that our teams are there and can take care of us” (Country manager, USA, Beta).

In other words, the research outlines the importance of the HQ’s added value. While assuring balance in exchanges among multiple MNE subsidiaries (balance in prioritizing business opportunities on a firm level; the role of guarantor of the in-return support between subunits), it encourages subsidiaries’ contributions to achieving firm-level objectives.

Coordination by core subsidiaries

In parallel, it is observed that the coordination of international sales activities is partly delegated to certain selected subsidiaries. For instance, in the case of Beta, the ‘modular structures’ market segment is well developed in Germany. Thanks to its proximity to key international actors in the marketplace, the German subsidiary plays an important role in coordinating intra-firm collaboration and in providing support to sister subsidiaries in this specific market segment.

[Manager from Germany], he is also our expert for modular structures, he supports the local teams in developing their local business. So, he is really the expert of modular structures and every week he visits a country. Also, we have nobody to take care of modular structures in the UK for the time being, so he is managing a couple of customers himself [in the UK] as an interim solution.

North area manager, HQ, Beta

In the case of Gamma, three core subsidiaries (with area sales managers) are responsible for the overall management of relationships with specific multinational customers.

I have three area sales managers. in the US, Asia, and Germany. I am responsible for the rest of Europe. I want these area sales managers to take more responsibility in terms of global accounts. […] We are pushing them down to the level of area sales managers, and saying ‘ok, in North America, [name of the person], he will be responsible globally for the sales to Ford and to GM.’

Sales director, HQ, Gamma

The selected subsidiaries are assigned responsibilities to build a global overview of customer activities, develop the customer strategy and coordinate the interdependent activities of multiple sister subsidiaries. The coordination role is assigned to those core subsidiaries either within the limits of specific market segment(s) or in relation to specific strategic customers.

In the case of Alpha, we did not observe any delegation of firm-level coordination to subsidiaries. This appears to be linked to the nature of interdependent activities: in the case of similar activities with few workflows among subsidiaries, the subsidiaries do not seem to have a better position than the corporate HQ within the internal MNE network to ensure the coordination of those activities. The differences among the firms studied somehow reinforce the common conclusions: the delegation of firm-level coordination is possible, but the nature of interdependent activities and potential collaborative tensions favor (or do not) the delegation of coordination.

Discussion and contributions

This study contributes to the debate on the role of MNE corporate HQ in the context of the globalized marketplace.

HQ role in coordinating multiple inter-organizational relationships

The theoretical framework highlights the strategic role of subsidiaries in business network development (Amann et al., 2017; Melin, 2014; Nell et al., 2010). The empirical study outlines how the role of the HQ in managing the international customer network merits further investigation. First, the HQ plays a major and unique role in developing partnership relations with customers worldwide. In this way, the HQ positively contributes to the subsidiary performance through its active involvement in local network activities (while participating in the negotiation of strategic projects, etc.). This feeds the debate on the positive or negative impact of HQ involvement in subsidiary activities (Ciabuschi et al., 2017; Decreton et al., 2019; Nell & Ambos, 2013; Valentino et al., 2022). The present study posits the positive effect of HQ involvement supported by the demand of external customer network actors.

Secondly, the empirical evidence highlights the role of the HQ in coordinating collective activities of vendor MNE subsidiaries in the management of business network activities across foreign markets. This is in response to the call for more research on the coordination of multiple inter-organizational relationships (Santistevan, 2022). The findings herein propose an explanation as to when and why the coordination of such inter-organizational relationships can be efficiently carried out by HQ. This can be explained by the nature of collective activities and collaborative tensions among multiple MNE subunits. Indeed, cross-border sales activities are characterized by strong interdependence among vendor MNE subsidiaries with potential conflicts of interests. Multilateral relationships are also characterized by a lack of hierarchical links which make it difficult for the subsidiaries concerned to deal with the underlying conflicts of interests on their own (Benito et al., 2014; Victor & Blackburn, 1987). In such cases, the coordination of collective activities carried out by the HQ is perceived as desirable by subsidiaries. These observations demonstrate a parallel to the HQ’s role of ‘referee’ in conflict management (Ambos & Birkinshaw, 2010; Bouquet & Birkinshaw, 2008; Narula, 2014). In comparison, the present study expands the conceptualization of the HQ’s role in the MNE network, explaining its role in coordinating multiple inter-organizational relationships with customer actors and providing insight into the nature of multilateral intra-organizational relationships.

HQ’s role in the alignment of multilateral intra-organizational relationships

Previous literature has widely discussed the role of HQ as a facilitator in providing a favorable context for inter-subsidiary collaboration (Beddi, 2011; Birkinshaw et al., 2017; Chiao & Ying, 2013). The present study adopts the multilateral intra-firm relationship perspective and provides a new line of reasoning on HQ’s role in aligning MNE subsidiaries.

The interviews reveal how lack of reciprocity across multiple subsidiaries may hinder their collaboration. Indeed, existing literature outlines the importance of the mutual character of commitment between actors (Anderson & Weitz, 1992; Vahlne & Johanson, 2021) but refers to dyadic relationships. The present study highlights how the HQ support provided to subsidiary activities compensates the non-reciprocal nature of inter-subsidiary collaborative relationships. This helps to deal with collaborative tensions, thus encouraging subsidiaries’ involvement in projects for the benefit of the firm as a whole. In other words, the research presented herein outlines the importance of the HQ’s role in managing complex intra-firm interdependencies due to its role as guarantor of the in-return support between subunits, or, more generally, though balancing intra-firm exchanges. Thus, the multilateral perspective provides a new line of reasoning and outlines how HQ-subsidiary relationships impact direct inter-subsidiary relationships.

HQ as the end orchestrator of the MNE network

The results illustrate how a core subsidiary can be well placed to coordinate collective activities towards customer actors on the company level. These observations contribute to the discussion on the growing role of the intermediate organizational level (Alfoldi et al., 2012; Pla-Barber et al., 2021; Vahlne & Johanson, 2021). How do these observations enrich the discussion about the complex role of the corporate HQ?

The delegated firm-level coordination may concern activities in which the core subsidiaries are directly involved. This is why coordination is sometimes seen to be delegated only on specific market segments or towards specific customers, this helps to build effective intra-firm collaboration without complete centralization of coordination. However, the related collaborative tensions, e.g., lack of reciprocity between subsidiaries, remain valid. The HQ ensures that the lateral collaboration and delegated coordination on the subsidiary level remain possible. In addition, when it is necessary to prioritize opportunities and share resources across the firm (among market segments, among customers), subsidiary cannot reproduce the HQ’s hierarchical decision-making authority (Vahlne & Jonsson, 2017).

Some scholars argue for a stronger role for the HQ in optimal firm-level coordination due to its stronger capacity for hierarchical information processing and thus more optimal decision-making (Egelhoff, 2010; Egelhoff & Wolf, 2017). The present study suggests that information processing is one of the stronger capabilities of core subsidiaries. In contrast, the HQ role is distinguished by its capacity to deal with collaborative tensions among multiple MNE subsidiaries.

Conclusion

This concluding section summarizes the theoretical and managerial contributions made herein and indicates the limitations of the study, as well as directions for future research.

Theoretical contributions

This research challenges extant literature on the role of the corporate HQ. While previous literature has provided versatile and somewhat contradictory conclusions about the role of the corporate HQ in the MNE network, this study seeks to provide a compelling logic with a new line of reasoning based on multiple network perspective. It combines the impact of both intra- and inter-organizational networks on the role of the HQ, which has hitherto been largely neglected in the literature (Kingkaew & Dahms, 2018).

First of all, previous literature has generally assumed that the role of the HQ in externally embedded MNEs is reduced, given the difficulty for the corporate HQ to influence subsidiaries’ network activities (Birkinshaw et al., 2017; Beugelsdijk et al., 2017; Forsgren, 2008). In contrast, the findings herein explain that, while the HQ’s support can be less valuable for the local network development of a highly externally embedded subsidiary, the management of customer networks across multiple foreign markets instead calls for a stronger corporate HQ role in MNE network coordination. The empirical evidence actually highlights the important role of HQ in managing strategic customer relationships worldwide, as well as in coordinating collective cross-border network activities.

Secondly, the focus on international sales activities made it possible to investigate the role of the corporate HQ in aligning the highly locally embedded activities of MNE subsidiaries. As observed, cross-border projects with mutual interests of MNE subsidiaries remain rare. Furthermore, network resources (Huggins, 2010) are particularly difficult to share. This context creates strong interdependence among vendor MNE subsidiaries and a stronger need for collaboration. The HQ’s role as a facilitator of inter-subsidiary collaboration is outlined, but with a different conceptualization regarding compensation of the imbalanced reciprocity in intra-firm exchanges at the firm level. This research responds to the call to move beyond the HQ-subsidiary dyad perspective (Galli Geleilate et al., 2020; Nell et al., 2017) and emphasizes the particular importance of the firm-level (HQ-several subsidiaries) perspective in MNE coordination.

Thirdly, this study differentiates the roles of corporate HQ and core subsidiaries in managing collective cross-border activities, thereby offering a more fine-grained understanding of MNE network coordination at the firm level. This brings us to the final conclusion: while involvement of subsidiaries in the coordination of global activities contributes to the flattening of the MNE (Pla-Barber et al., 2021), the role of the corporate HQ in managing multiple network interdependencies remains important and, thus, the HQ retains a prominent role in the MNE network.

Managerial contributions

This research makes several managerial contributions. First and foremost, managers are advised to pay particular attention to customer relationship development across different inter-organizational levels: relationships with the HQ and subsidiaries of the multinational customer; or with multiple network actors involved in the customer project both directly and indirectly (customers of customers, etc.). Second, the insights of the study may help the managers to frame their policy on the coordination of the collective cross-border activities. Managers must be aware of the nature of potential conflicts of interests between multiple subsidiaries interlinked through cross-border sales activities. HQ involvement in and support of the subsidiary’s activities can be used as a tool for dealing with collaborative tensions. The delegation of coordination in specific markets segment or for specific strategic customers may also help to cope with the complexity engendered by the growing number of tightly interwoven activities which require a firm-level strategic perspective.

Limitations and future research

The limitations of the study point to directions for future research. Thus, the three MNEs studied are family firms. The specificity of family firms is considered to have stronger weight in smaller family companies (Valenza et al., 2021) and such functional activities as R&D (Carney, 1998). It thus, presumably, have less influence in the presently studied context of sales activities of strongly internationalized MNEs. From a broader perspective, we encourage future research to examine the possible difference between family and non-family firms in business network management. Future studies could also simultaneously collect data from MNEs and their customers.

Analyzing MNEs from the B2B market sector represents the originality of this study. The firms studied are smaller in size than frequently studied large multinationals. It is common for companies with the profile of ‘specialists’ in narrow market segments (Simon, 1996). The fact that their international subsidiary network is mainly composed of sales subsidiaries with the relative centralization of production and R&D activities at the HQ level may generate questioning regarding the subsidiary’s dependence on expertise and resources controlled by the corporate HQ. In spite of this, as outlined by other scholars, the MNE’s configuration and coordination are developed in the course of functional activities (Malnight, 1996; Schmid et al., 2016). In the present research, we focused on the coordination of international sales activities. The empirical observations are aligned with the theoretical considerations of the business network view, which is that subsidiaries play the central role in business network development (Amann et al., 2017; Nell et al., 2010) and that subsidiary autonomy in decision-making is not the same for all value chain activities (Reichstein-Scholz et al., 2021). Thus, we assume that empirically derived conceptualization of the role of the corporate HQ in MNE network coordination - in the context of international sales activities - remain generally valid. As far as the central research question, we argue that the stronger role of the corporate HQ is explained by the growing interdependence of multiple business networks due to increasingly globalized markets, and not by the size of the MNE. Finally, the multilateral perspective in the analysis of the HQ-subsidiary relationships also provides significant scope for further theoretical and empirical investigation of the MNE network. Future research could investigate the coordination mechanisms underpinning effective management of multilateral interdependent relationships, and the question of peer control.