CONTROL DIFFERENTIATION, RESOURCE SHARING AND PERFORMANCE OF BUSINESS UNITS

Scholars in strategy and in international management emphasize that a fit between the context of a business unit and corporate control mechanisms enhances the performance of both the individual business unit and corporations as a whole. However, the negative implications of control differentiation across business units within a corporation have not been thoroughly studied. We use insights from procedural justice literature to assert that perceived control differentiation may be problematic when the success of a business unit depends on resource sharing with other units in a corporation. Data of 136 business units in 45 Dutch multidivisional firms support our assertion.