Ambos & Birkinshaw (2010). Headquarters' attention & its effect on subsidiary performance - Mgmt. In

RESEARCH ARTICLE
Abstract:
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Drawing on a sample of 283 subsidiaries in three countries, we investigate how headquarters’
attention affects subsidiary performance.
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Scholars have recently argued that top management’s attention is the most critical, scarce
and sought-after resource in organizations (Haas and Hansen 2001 ; Bouquet and Birkinshaw
2008 ). However, the question how headquarters’ attention affects subsidiary companies re-
mains largely unexplored.
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Our study shows that subsidiaries which have a high level of strategic choice and receive at-
tention from headquarters perform better than their peers. More specifically, we find that the
interactions of subsidiaries’ autonomy, inter-unit power and initiatives with attention increase
subsidiary performance.
Keywords: Headquarters-subsidiary relationships · Attention · Strategic choice ·
Subsidiary performance
Manag Int Rev (2010) 50:449–469
DOI 10.1007/s11575-010-0041-4
Headquarters’Attention and Its Effect
on Subsidiary Performance
Tina C. Ambos · Julian Birkinshaw
Received: 25.02.2008 / Revised: 15.08.2009 / Accepted: 10.09.2009 / Published online: 15.07.2010
© Gabler-Verlag 2010
Prof. T. C. Ambos (
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Department of International Management, Johannes Kepler University, Linz, Austria
e-mail: [email protected]
Prof. J. Birkinshaw
Strategic and International Management, London Business School, London, United Kingdom

450 T. C. Ambos and J. Birkinshaw
Introduction
Scholars have recently argued that—even compared to information—attention is the most
critical, scarce and sought-after resource in organizations (Haas and Hansen 2001 ). In the
context of the modern multinational corporation (MNC) that aims to integrate a portfolio
of dispersed and differentiated subsidiaries, the allocation of headquarters’ attention to
these units has arguably become a key strategic issue (Campbell 1989 ; Boland et al. 1994 ;
Simons 1991 ; Bouquet and Birkinshaw 2008 ; Birkinshaw et al. 2007 ). By its nature,
organizational attention is limited and selective in its focus (Simon 1947 ; Ocasio 1997 ),
leading to the emergence of an internal market for headquarters’ attention in many MNCs
(Haas and Hansen 2001 ).
Different actors, especially headquarters and subsidiary managers, will have divergent
ideas how attention should be optimally allocated creating a non-trivial matching prob-
lem of attention seekers and providers in the organization. Headquarters, for their part,
may want to support subsidiaries’ operations, transfer knowledge, ensure coordination
or strengthen their control and limit disruptive behavior. Subsidiaries, on the other hand,
are competing for headquarters’ attention to acquire resources, to augment their market
mandate, to increase their bargaining power, or try to avoid intervention. Notwithstanding
diverse motivations to attract or buffer attention, it is far from clear whether subsidiaries
actually benefit from headquarters’ attention. Is headquarters’ attention indeed a valuable
resource for subsidiaries? And under which circumstances are subsidiaries able to lever-
age headquarters’ attention to increase their performance?