critical perspectives on international business

Purpose – As subsidiary power has received relatively little attention in existing research, this paper aims to enhance the understanding of genuine sources of subsidiary power and how they work in headquarters-subsidiary relationships.

Design/methodology/approach – The paper is based on a review of the relevant literature and four illustrative case studies, which are written on the basis of secondary sources. Each case was selected because it adequately represents a particular type of power. This allows for cross-case comparisons of the strengths and sustainability of different types of power, and facilitates the exploration of the application of subsidiary power in headquarters-subsidiary relationships.

Findings – Four genuine types of subsidiary power are identified. One of these – micro-political bargaining power – plays a subtle but crucial role, as it is important in the enactment of the three other types of power, i.e. systemic, resource-dependency, and institutional.

Practical implications – As headquarters have unlimited access to formal power, subsidiaries find it necessary to constantly apply micro-political bargaining power. The empirical material suggests that the effectiveness of micro-political bargaining power for subsidiary actors is based on two factors: information retrieval from headquarters and the leveraging of such information in issue-selling or conflict-handling processes.

Originality/value – The paper contributes by theoretically delineating genuine types of subsidiary power and by illustrating the strength, sustainability and interaction of these types of power in headquarters-subsidiary relationships.