Strong-Armed Headquarters Control and Tame Subsidiary Responses in a Contemporary Chinese MNC: The Case of Huawei

Employing qualitative, single case study methodology, we investigated the power relationships between the headquarters (HQ) and overseas subsidiaries of an iconic PRC-based multinational corporation (MNC), which appears to have been highly successful in economic terms. Drawing on Harzing’s (1999) model of control mechanisms and on Oliver’s (1991) model of strategic responses to institutional processes, we found an overwhelmingly asymmetrical power relationship between the HQ and the subsidiaries. It appeared that the HQ was exerting dominance through a plethora of ineluctable control mechanisms, and that responses by employees in the subsidiaries mainly entailed acquiescence with no room for avoidance. There were also signs of defiance, typically expressed by exiting the firm, and of active agency, which included working hard and letting surveillance systems showcase efforts and achievements. Our contribution is to show that the focal firm has evolved comprehensive systems, which yoke customer outreach by the subsidiaries to centralized product innovation at the HQ, and that the HQ’s use of extensive, and perhaps psychologically excessive control mechanisms is legitimized by economic success.