Interunit Communication in Multinational Corporations

In this paper we investigate some of the organizational factors that influence subsidiary-headquarters and intersubsidiary communication in multinational companies. Our study is based on data collected from 164 senior managers working in 14 different national subsidiaries within the consumer electronics division of Matsushita, a Japanese company, and 84 senior managers working in nine different national subsidiaries within the same business of N.V. Philips, the Holland-based competitor of Matsushita. We show that while subsidiary autonomy has no discernable influence on interunit communication, interpersonal relationships developed through lateral networking mechanisms such as joint work in teams, taskforces, and meetings have significant positive effects on the frequency of both subsidiary-headquarters and intersubsidiary communication. The findings are consistent in the two companies, one Japanese and the other European, and the underlying theoretical propositions appear applicable across borders.