Conflict and collaboration in headquarters-subsidiary relationships: an agency theory perspective on product rollouts in an emerging market

Official URL: http://dx.doi.org/10.1108/10444060610749482

Purpose - The paper seeks to explain the collaborative intent trust development, and conflict resolution in a headquarters-subsidiary relationship in a new product launch context in an emerging market. Design/methodology/approach - Grounded theory development is employed through personal interviews with senior executives of selected multinational firms operating in Turkey. Findings - A major challenge in collaboration is convincing both parties to the dyad that the expertise of the other party is essential for effective collaboration. Research limitations/implications - The findings are based solely on looking at the subsidiary side of the subsidiary-HQ dyad in a single country, which limits their generalizability. Since we did not interview the HQ side of this dyad, speculations made about the possible reactions of HQ personnel to subsidiary actions must be interpreted with caution. Practical implications - The perceptions of both parties play a far more important role than the facts or perceptions of just one party when it comes to relationships and conflict resolution. Both parties need to pay more attention to the possible causes of means incongruence and take perception gaps and the other side's needs and expertise into account when approaching collaboration and conflict resolution. Originality/value - Agency theory is extended to a multinational firm-subsidiary context in order to suggest mechanisms for resolving conflict through increased communication, greater trust in each other's capabilities, and greater collaboration in meeting common challenges. A diagnostic and prescriptive framework and mechanisms are also offered through which disruptive conflict can be transformed into functional conflict and collaboration.