Abstract:
This paper is an empirical investigation into the control mechanisms of headquarters (HQ) exercised over their subsidiaries. Grounded in a literature review of the reasons for employing either parent country national or host country nationals in top management position-subsidiary manager- in foreign subsidiaries, a number of factors influencing the choice between these alternatives are identified. Using a data collected from 147 Multinational Enterprises (MNEs) operating in the kingdom of Saudi Arabia (KSA), the influence of each of these factors on this selection is empirically tested with the help of primary data. Headquarters can strategize to implement control by the informal and social means method by positioning a sizeable number of managers from the home country within the subsidiary. Indeed, our results revealed this as true. As such, our study reconfirmed the importance of the variable size, but concluded that it is mainly associated with higher levels of indirect control.
