The Corporate Governance of Subsidiaries in Multinational Corporations

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The corporate governance of subsidiaries in multinational groups of companies has become increasingly important for managers and researchers, particularly through the developments around classical corporate governance in the last years. This book investigates for the first time comprehensively a topic, which research has addressed only sporadically so far. It reviews established theories and empirical findings from classical corporate governance, and applies them to subsidiaries, thereby describing and delineating the topic and deducing the availability and efficiency of governance mechanisms for subsidiaries. A dataset on multinational groups, surveyed at IMD International, is employed to test hypotheses from the theoretical analysis, and the findings are combined with those from a series of executive interviews. The core result is that mechanisms of classical corporate governance are, by and large, unavailable or inefficient for subsidiaries, and alternative solutions are employed in practice. Overall, subsidiary governance is found to be of strategic importance for multinational groups, and the book brings forward recommendations for managerial practice.