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The power of influence. A differentiated approach towards power in the mulitnational corporation

Alwin Ruimschotel and Emiel Wubben

The paper was published at the 17th IMP-conference in Oslo, Norway in 2001.

This paper concentrates on the issue of organisational design, more specifically on whodetermines organisational reality. ?The fundamental processes which determine the actual shape,the current reality of any organization, do not change. The socio-economic processes identifiedby Durkheim, Spencer, etc., but labeled by Lawrence and Lorch (1967) as differentiation andintegration determine the actual shape at the moment in time.? (Hunt 1994, 2) Managementliterature mostly concentrates on integration. In response this paper adresses the issue of internaldifferentiation and its relationship to a subsidiary's ability to influence the strategic behaviour,and ultimately the shape, of the bigger owner of the system , the MNC, of which it is part of. Thepaper is conceptual and descriptive.The research question driving the research is the following: Why are certain subsidiaries withinthe same multinational corporation mor influential than others with regard to the strategicbehaviour of the corporation? The purpose of the study is to explicate theoretical concepts and anetwork/political view of organizations in order to deduce an analytical model describing theprincipal sources and distribution of informal power within mutinational corporations, from theviewpoint of the subsidiaries. The article links up to such literature as Gupta & Govindarajan,Bartlett & Ghoshal, Trompenaars, Nohria, Andersson and Pahlberg,Powell, and Pfeffer &Salancik. The model focusses on the roles subsidiaries perform as a result of establishedexchange relationships. It defines knowledge, product, and capital transactions between MNCunits and relates each of to the central office-subsidiary relationship. It also argues for takingsocial relationships seriously as source for influential position. Cultural differences andcontextual variables are taken as background variables. We want to present the model. We lookfor relevant data to test the model as a whole as well as several hypotheses. The paper is based ona MSc-thesis by A. Ruimschotel, MScBA