Consequences of perception gaps in the headquarters-subsidiary relationship

This paper is built on two premises: (1) that HQ and subsidiary managers often have different perceptions about the role of the subsidiary in the multinational corporation, and (2) that such differences have important implications for the management of the HQ-subsidiary relationship. Using data collected from 89 HQ-subsidiary dyads, we test and find support for a LISREL model, in which subsidiary managers' overestimation of their roles is associated with greater HQ control of the subsidiary, which in turn is associated with a lower level of HQ-subsidiary cooperation.