Patterns of corporate influence in the host country: a study of ABB in Canada

Abstract

This article draws on our four case studies to examine the nature of the relationships between ABB and its Canadian subsidiaries. Starting from a critical review of the literature, it develops a framework that is sensitive to three levels of analysis: the factors that shape the parent corporation's strategies, the characteristics of the host countries in which the MNC operates and the characteristics of the local subsidiaries themselves. The empirical material illustrates how innovation is generated by a two-way process, in which the initiative of corporate leaders challenges the ‘interpretation’ of local actors. In doing so, we point to a number of key omissions in the influential attempt by Bartlett and Ghoshal to use ABB to develop a managerial theory of the firm. This research also leads to broader considerations regarding the interface between markets and organizations. As distinct from the orthodox view, a transnational corporation may be conceived as a mediator between the market and a local subsidiary. In many ways, the global corporation channels and mediates the impact of external market forces on internal organizational actors, through a process involving the exercise of politics and power. The article has significant implications for decision making on human resource management. In particular it stresses that local managers, local unions, and employees can think and act strategically only in as far as they properly assess the limits of their respective sphere of organizational autonomy within the corporation.

Keywords:

• Multinationals
• foreign subsidiaries
• organizational structure
• globalization