Headquarters—subsidiary Relationships in Multinational Companies: A British—German Comparison

One of the recurrent themes in international organization studies is what happens to organizational practices as enterprises are increasingly exposed to internationalizing influences. Such influences can be divided into two main areas: 1. On the one hand, enterprise activities are internationalized through exposure to customers, suppliers or alliances outside a society or domestic economy of origin, regulated by common and relatively homogeneous institutions. This kind of internationalization culminates in the formation of a multinational company if and when non-marginal company functions are localized in subsidiaries outside the country of origin. 2. On the other hand, even enterprises which are not internationalized or multinational are subject to competitive pressures, regulatory norms and imitation influences, which emerge from an international search for good or best organizational practices. This debate continues, partly under new auspices, along a well-established track, which focuses on the extent of and explanations for convergence and divergence. The literature has used these concepts in different ways. An authoritative definition by reputed scholars states that: ‘The subject of organizational convergence is concerned with how far organizations in different countries have traveled along a path to global convergence in operations and management and, conversely, how far the influence of specific cultural factors must be understood and planned for if the manager is to be effective in cross-cultural situations’ (Pugh and Hickson 1996: 3899; see also the overview in Geppert et al. this volume, based on Child, 2000).