Introduction: Problem, Relevance and Research Question

Controlling and coordinating a network of geographically and culturally dispersed subsidiaries is probably one of the longest standing challenges in international management. For one, cost pressures, a highly competitive environment, and the dangers of inefficiencies due to double invention require the firm to integrate their far-flung operations. On the other side, persisting institutional and cultural differences as well as increasing local competition forces firms to be locally responsive at the same time. Thus, the firm’s global network needs to be coordinated effectively in order to explore new local resources or to exploit resources within the international network of subsidiaries (Bartlett & Ghoshal, 1989). The great diversity of Multinational Corporation (MNC) operations increases the complexity of their system interdependence which, in turn, demands more coordination (Lawrence & Lorsch, 1967) and affects information processing and control systems (Egelhoff, 1984; Vachani, 1999). Consequently, the question of how to coordinate an MNC’s dispersed value-creation activities has become prominent and widely discussed in the literature (Bartlett et al., 1989; Pugh, Hickson, Hinings, & Turner, 1968).