Digitalization and corporate parenting styles of multinational corporations

Abstract

PurposeThis paper aims to outline the current and future influence of digitalization on the corporate parenting styles (CPSs) of multinational corporations (MNCs).Design/methodology/approachThe authors used conceptual modeling in this study.FindingsThe authors identified five types of CPSs (Hypnos, Cronus, Rhea, Zeus and Athena). The overall impact of digitalization on CPSs is related to new, formidable opportunities for decreasing costs and increasing the efficiency of the intra-corporate transfer of knowledge and talent. Furthermore, digitalization leads to greater tightness in subsidiaries’ performance targets and greater intensity of control over subsidiaries’ activities, lower degrees of subsidiary autonomy and lower level of trust between the corporate headquarters and subsidiary managers. These effects endanger the existence of two CPSs (Hypnos and Athena) and significant changes for the other three CPSs.Practical implicationsDigitalization may lead to more homogeneous corporations, with the lower variety of CPSs and the greater centralization of decision-making in corporate and regional headquarters and stronger control on operations and performance of subsidiaries. Increased opportunities of a horizontal value transfer (knowledge) within the corporation will present an additional competitive advantage of subsidiaries of MNCs. The increased ability and willingness of corporate and regional headquarters of value appropriation from subsidiaries in different forms (profit, revenues, knowledge and talent) will force subsidiaries to use that additional competitive advantage to become more aggressive competitors in local and global markets.Originality/valueTo the best of the authors’ knowledge, this is the first attempt in the academic literature to predict the mutation of CPSs of MNCs under the impact of digitalization.