Conflict and development: A headquarter intervention view of IT subsidiary evolution

Abstract

In this paper, we examine the impact that headquarter interventions have on how subsidiaries evolve in the Indian IT offshoring industry. We analyze how a subsidiary evolved in the presence of a rare phenomenon: a negative headquarter intervention. Such an evolution has nuances and theoretical implications that existing frameworks cannot fully explain. Although researchers have often studied the relationship between a subsidiary and its headquarters through a headquarter-intervention lens, they have not employed it to examine how subsidiaries evolve. In this paper, we present a generalized model of subsidiary evolution using three constructs: value potential, headquarter intervention, and headquarter control of the subsidiary. In line with our study�s exploratory nature, we conducted an in-depth case study of a multinational firm and its Indian subsidiary over several years. We found that, in the presence of high potential value in the subsidiary ecosystem, certain headquarter interventions can lead to a conflict between the headquarters and the subsidiary. If not aligned with the subsidiary�s interests and values, a headquarter intervention can negatively affect the subsidiary�s growth even if the headquarters has good intentions. � 2019 by the Association for Information Systems.