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.
Jha, A. K., & Bose, I. (2019). Conflict and Development: A Headquarter Intervention View of IT Subsidiary Evolution. Communications of the Association for Information Systems, 45, pp-pp. https://doi.org/10.17705/1CAIS.04514