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 the

ratio of coordination mechanisms in parent-subsidiary relationships: centralization,

formalization and socialization, taking into account the existence

of 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 applied

considering volatile environments. Some propositions are posed from discussion;

the main conclusion is that in volatile environments, parent-subsidiary

relationships should increase the use of coordination mechanisms, and according

with the typology analyzed, only two of the structures, the hierarchical

and the federation types, are more likely to be found in those environments.