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Management at a distance
Multinationals (MNCs) are key drivers of economic growth, accounting for 33% of global output (OECD 2018). However, within MNCs, the economic performance of foreign affiliates declines markedly with distance from headquarters (HQ)... Multinationals (MNCs) are key drivers of economic growth, accounting for 33% of global output (OECD 2018). However, within MNCs, the economic performance of foreign affiliates declines markedly with distance from headquarters (HQ). This pattern implies the existence of frictions that restrict how much economic growth foreign direct investment (FDI) can generate in host countries. Understanding the underlying mechanisms has important implications for the economic benefits of FDI and FDI policy. Yet, they remain little understood. In this project, I propose a novel explanation: management problems at a distance. Management problems can be severe even in purely local settings (e.g., Gibbons and Roberts 2013). It is plausible that principal-agent (PA) problems between HQ and the foreign subsidiary manager rise disproportionately when different countries, cultures, languages, and institutions are involved. As previous research has been severely restricted by the scarcity of global organizational data on MNCs, so far, there exists no systematic evidence on PA problems within MNCs and how they can be resolved. I will focus on two solutions: the employment of foreign subsidiary managers that have a certain connection to HQ, and the use of information and communication technology (ICT) to improve monitoring problems. I have been able to identify several novel data sources that can be combined to create the first comprehensive datasets on managers and ICT use within multi-location firms in three historical and contemporaneous settings. Combined with innovative empirical approaches, this allows me to provide the first tests for the existence of PA problems within MNCs and study several channels through which PA problems can affect economic growth: managerial compensation, changes in risk-taking, and career incentives of middle managers. I will estimate how these channels affect the economic performance of subsidiaries, firms, and host economies. ver más
31/05/2029
1M€
Duración del proyecto: 63 meses Fecha Inicio: 2024-02-05
Fecha Fin: 2029-05-31

Línea de financiación: concedida

El organismo HORIZON EUROPE notifico la concesión del proyecto el día 2024-02-05
Línea de financiación objetivo El proyecto se financió a través de la siguiente ayuda:
ERC-2023-STG: ERC STARTING GRANTS
Cerrada hace 2 años
Presupuesto El presupuesto total del proyecto asciende a 1M€
Líder del proyecto
LUDWIGMAXIMILIANSUNIVERSITAET MUENCHEN No se ha especificado una descripción o un objeto social para esta compañía.
Perfil tecnológico TRL 4-5