Coordination mechanisms and parent-subsidiary relationships in volatile environments: a theoretical approach

Abstract

This paper aims to analyze how a volatile local environment can influence theratio of coordination mechanisms in parent-subsidiary relationships: centralization,formalization and socialization, taking into account the existenceof some contingency factors like the strategic approach of the multinational,country of origin, complexity, size and age. Likewise, Ghoshal and Nohria´s(1989) typology of the parent-subsidiary relationship structure is appliedconsidering volatile environments. Some propositions are posed from discussion;the main conclusion is that in volatile environments, parent-subsidiaryrelationships should increase the use of coordination mechanisms, and accordingwith the typology analyzed, only two of the structures, the hierarchicaland the federation types, are more likely to be found in those environments.