The Influences of Multinational Corporation’s Headquarters and Host Country Cultures on Foreign Subsidiaries’ Management Styles

Abstract

The approach of the traditional top down total directives from an international (or, multinational, global or transnational) corporation’s corporate headquarters to its foreign subsidiary units about the choice of the unit's management styles and organizational culture and internal practices is not effective. Instead, international firms must allow the units to develop their own management styles and organizational culture to suit their respective host country environments, religion, social, work and operating cultures. Please see Notes 1 and 2 for definitional issues. Host country cultures have strong influences on a foreign subsidiary unit’s organizational culture in as much as the headquarters’ influence can be somewhat blended and tempered. Host country nationals employed in the foreign subsidiary unit, while they are loyal to the generalized, core global corporate philosophy and values from the headquarters, they can be expected to be more intense in their feelings of their national patriotism and values. The foreign subsidiary’s management styles and organizational culture are more likely to closely adhere to the host country’s values and temperament. The moral of the issue is that the headquarters must delegate to the foreign subsidiary the choices of management style, method of management and the internal organizational culture and processes that pervade its internal workings. The corporate headquarters’ influences are likely to hold stronger for the specific values, processes and norms of industry, technical, commercial, and administrative so long as they do not conflict with the host country’s core cultural values, norms and tradition and practices.