Control and Coordination of Information Systems in Multinational Corporations: An Empirical Examination of Subsidiary and Host Country Factors

In multinational corporations (MNCs), subsidiaries operate in environments separated, not only by geographical distances, but also by time, language, politics, and legal frameworks. Such heterogeneity of operating environments puts great demands on the management of information systems (IS) to control and coordinate the organization's worldwide IS operations. This study examines the factors influencing the integration of the IS function across subsidiaries in MNCs. Specifically, the impact of subsidiary strategic role, perceived environmental uncertainty (PEU), and host country IS resources on the use of formal and informal mechanisms of control and coordination is examined. Multiple regression models were run on matched sets of data collected from 54 headquarters-subsidiary pairs. The relationship between the strategic role of a subsidiary and the level of integration was found to be significant. Moderate support was also found for the hypothesized relationship between IS resources and integration, though not in the direction expected. There was no support for the predicted relationships involving perceived environmental uncertainty.