Key factors in global supply headquarters‐subsidiary control systems

Abstract

PurposeAccording to the reviewed literature, in order to build effective and efficient global supply (GS) strategies, multinational companies (MNCs) need to define and implement adequate headquarters' control and follow‐up systems for GS management performance in order to guarantee world supply consistence and alignment. The purpose of this paper is to shed some light on how key variables affect GS headquarters‐subsidiary control systems and their complementary behaviours across culturally similar business units.Design/methodology/approachMultiple case study methodology, with a sample including seven Italian MNCs, has expanded their operations to the Mercosur area (Latin America's Southern Common Market) and designed to guarantee theoretical replication in the analysis of the empirical evidence.FindingsIt was found that, although cultural similarities strongly influence MNCs' GS headquarters‐subsidiary control systems, other factors, such as purchasing and globalization sourcing strategy centralization and globalization process evolution, lead companies to implement complementary formal control systems that are consistent with the sharply personalized profile set by cultural proximity.Research limitations/implicationsIn order to expand and deepen these conclusions, further research will be necessary to validate these findings in a wider sample, including companies from various countries of origin and destination. In any case, a longitudinal study could help to shed some light on the evolution of headquarters‐subsidiary relationships within global sourcing strategies.Originality/valueThe paper enables better understanding of the impact of and interactions between key driving factors in GS headquarters‐subsidiary control systems in cases of strong cultural similarities through a multi‐case sample study.