Title: Problem perceptions by top managers in distant subsidiaries

Authors: Jørn Flohr Nielsen

Addresses: Department of Business Administration, School of Business and Social Sciences, Aarhus University, DK-8000 Aarhus C, Denmark

Abstract: Subsidiary managers in distant countries are expected to cope with uncertainty and to bridge the gap between headquarters' strategies and subsidiaries' realities, but few studies make meaningful comparisons between subsidiary managers' perceptions of problems. This is the aim of this longitudinal study. We investigate how expatriate CEOs in Danish subsidiaries in East Asia and in Germany perceive problems compared with native CEOs. Data are mainly gathered in surveys in 1995, 2005 and 2012, in total 205 questionnaires are analysed using structural equation modelling. The results indicate that expatriate CEOs significantly more often report problems of equivocality. Perceived problems in headquarters-subsidiary interactions in East Asian subsidiaries are not significantly associated with CEO expatriate status, but are instead significantly associated with (moderated by) MNC use of cultural modes of control. The study also shows that problem perceptions remain fairly stable over time.

Keywords: cultural distance; expatriates; expats; headquarters-subsidiary control; longitudinal study; problem perception; structural equation modelling; SEM; subsidiary managers; uncertainty; HQ strategies; MNC subsidiaries; multinational corporations; manager perceptions; Denmark; East Asia; Germany; expatriate CEOs; native CEOs; equivocality; cultural modes; culture.

DOI: 10.1504/EJIM.2015.070231

European Journal of International Management, 2015 Vol.9 No.4, pp.484 - 509

Received: 22 Jun 2013
Accepted: 17 Jan 2014

Published online: 30 Jun 2015 *

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