Politics and Power within MultinationalCorporations Mainstr.docx

Politics and Power within Multinational
Corporations: Mainstream Studies,
Emerging Critical Approaches and
Suggestions for Future Research
Mike Geppert and Christoph Dörrenbächer1
Surrey Business School, University of Surrey, Guildford GU2
7XH, UK, and 1Faculty of Business and Economics,
Berlin School of Economics and Law, Badensche Strasse 50/51,
D-10825 Berlin, Germany
Corresponding author email: [email protected]
Given the increased public interest in the use and misuse of
power in multinationals in
the aftermath of the financial crisis, it is notable that power
relations in multinational
corporations (MNCs) have not gained enhanced attention in the
academic community.
What is missing so far in the study of MNCs is a systematic
examination of how power
and politics within MNCs have been addressed in mainstream
international business
(IB) and sociological research studying the MNC. This paper
starts by critically review-
ing these two mainstream approaches in the study of MNCs as
organizations and
seeking to understand the shortcomings of former research.
Next, it reviews new
emergent critical perspectives, which the authors call socio-
political studies of MNCs,

where power and politics are addressed not just more
prominently, but also differently,
from a more bottom-up and actor-centred perspective. After
reviewing this emergent
stream of research, the authors propose that future studies
should take a more micro-
political perspective and focus in more detail on the micro-
foundations of power
relations. In the concluding section, the authors show how
future studies of MNCs can
learn from both critical interactionist and discursive theories
when analysing organ-
izational politics and power relations. A framework is proposed
for the study of micro-
level political game-playing in MNCs, based on a three-
dimensional framework for
organizational power (episodic, rules of the game and
domination), and some key
research questions for future studies are suggested.
Introduction
It is interesting that, historically, power and politics
within multinational corporations (MNCs) have not
had a more central role in the study of MNCs in the
academic field of international business (IB), which
is dedicated to the study of internationalization,
foreign direct investment (FDI) and internationally
operating firms. International business scholars have
occasionally shown some interest in the study of
MNC power and even organized a symposium to
shed some light on the ‘Janus face’ and ‘dark side’ of
MNCs (e.g. see Eden and Lenway 2001). However,
the main emphasis for a long time was chiefly on
the power of MNCs, e.g. political bargaining strat-

egies of MNCs when dealing with host country
governments and nation states (e.g. see Fagre
and Wells 1982; Nebus and Rufín 2010). The
most prominent IB research on politics and power
within MNCs is concentrated on subsidiary entrepre-
neurship, innovation and mandate change (e.g.
Birkinshaw 1996). Political approaches of headquar-
ters (HQ) and subsidiary management are mainly
understood as determined by external economic,
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International Journal of Management Reviews, Vol. 16, 226–
244 (2014)
DOI: 10.1111/ijmr.12018
© 2013 The Authors
International Journal of Management Reviews © 2013 British
Academy of Management and John Wiley & Sons Ltd.
Published by John Wiley & Sons Ltd, 9600 Garsington Road,
Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA
02148, USA
technologicaland business network structures. The
micro-foundations of organizational power relations,
including the dynamic role of agency and micro-
politics within MNCs, have unfortunately not yet
been fully explored. Only recently has IB research
moved away from rather limited conceptualizations
of power structures within MNCs. ‘Emergent’ criti-
cal approaches have increasingly gained ground, as
stressed by Barner-Rasmussen et al. (2010). The
latter studies draw mainly on more actor-cantered
sociological perspectives on organizational power

within MNCs, all offering alternative perspectives to
the dominant rationalistic mainstream IB views on
power and politics in MNCs.
This paper unfolds as follows. It starts with a sys-
tematic overview on how the subject of power and
politics within MNCs has been addressed in main-
stream IB and what the shortcomings are. After that,
we discuss how mainstream organization sociologi-
cal researchers, especially institutionalist scholars,
have treated power and politics. We demonstrate that
the key focus of former studies on external societal
influences and supra-organizational authority and
power structures has left little room for developing a
deeper understanding of organizational power rela-
tions within MNCs. Next, we review and reflect on
emerging critical approaches, which bring together
two typically separated theoretical debates: first,
about the institutional and cultural embeddedness of
social relationships in the MNC and, second, about
the role of agency and diverse key actors, which
constitute the MNC as a ‘political system’ (Bélanger
and Edwards 2006; see also Morgan and Whitley
2003). In the final and concluding section, we intro-
duce interactionist and discursive approaches, which
provide deep insights into the micro-foundations of
MNC power relations. We refer to ideas of organiza-
tional power developed by organization studies
scholars, which have not been systematically dis-
cussed in mainstream IB. Accordingly, we define
power relations in MNCs from a processual perspec-
tive that closely links micro-political and language
games. Our key question is how power is exercised
through micro-political game-playing within MNCs,
which can have both stabilizing and de-stabilizing
effects on established power relations. The proces-

sual nature of micro-political game-playing has been
captured in the term ‘politics-as-activity’, which
points to two aspects of political activities: ‘politick-
ing’ and ‘politicization’ (Palonen 2003). Politicking
refers to struggles over redistribution of existing
power resources and thus might often have stabiliz-
ing effects on established power relations. Politiciza-
tion is more concerned with challenges to established
power structures. It refers to the question of whether
or not the games played by key actors undermine the
established rules of the game and patterns of domi-
nation. Accordingly, the concern of this paper is
threefold: (a) to what extent meanings or established
rules of the game become ‘fixed or reified in certain
forms’ (Clegg 1989, p. 183), i.e. to what degree pow-
erful key actors take these rules for granted when
playing games; (b) how active agency and powerful
actors reflect on the established meanings of rules,
and (c) how the rules of games, such as coercive
benchmarking of subsidiaries, become ‘powerful’
social practices within contemporary MNCs, and
why some actors choose to resist them.
Power and politics within MNCs in
mainstream IB studies
Historically, IB research on power and politics within
MNCs focused on studying the influence and chang-
ing role of HQ management (e.g. Stopford and Wells
1972; Vernon 1966), with, for example, Hymer
(1970) actually predicting that more geographical
dispersion of MNCs would lead to greater concen-
tration of decision-making power at the centre. As
long as HQ management was seen as being in the
driving seat, the role of lower-level managers, for

example, in local subsidiaries, and of other employ-
ees was mainly reduced to adaptation either to cen-
trally set strategies or to external environmental
pressures. Mainstream economic research on MNCs
seems to have adopted this approach uncritically,
including the highly influential ‘eclectic paradigm’,
which we review first in this section. Later studies
interested in the ‘evolution’ of the MNC (e.g. Bartlett
and Ghoshal 1989) also took a rather centralist view
on power and politics in MNCs; we review this
research in the second part of this section. In the final
part of this section, we discuss IB studies that look
more closely into issues of ‘influence and power
[and] of how the trade-offs between multiple
stakeholders and multiple perspectives are made’
(Doz and Prahalad 1991, p. 46). We refer especially
to the work of Forsgren and colleagues, on business
networks, and to the work of Birkinshaw and
colleagues, which addresses how MNC power struc-
tures and political bargaining by subsidiary manag-
ers are linked with entrepreneurship, innovation and
Politics and Power within MNCs 227
© 2013 The Authors
mandate changes (Birkinshaw 1996, 2000). A
summary of the findings is given in Table 1.
The eclectic paradigm: the politics of the absence
of politics

Mainstream economic research focuses on the effi-
ciency of managerial control when studying FDI and
how MNCs internationalize. Drawing on ideas of
transaction cost economics, this research asserts that
MNCs apply either market-oriented or hierarchical
forms of control (or some combination of them) to
control international ventures. A highly influential
approach in this academic camp is Dunning’s eclec-
tic paradigm (also called the OLI paradigm), which
explains FDI and the existence of MNCs by arguing
that internationally operating firms are able to
combine ‘ownership’, ‘locational’ and ‘internaliza-
tion’ advantages (e.g. Dunning 2000; Dunning and
Rugman 1985). According to this scheme, ownership
advantages refer to a company’s specialized home
country capabilities, such as human capital, patents,
technologies, intellectual property rights, brands and
reputation. This approach assumes that these assets
must be hierarchically controlled when replicated by
MNCs in new international market environments,
with a key question being how to transfer knowledge
and management practices efficiently. Locational
advantages are mainly seen as cost saving and market
opportunities. Finally, internalization advantages are
seen as the ability of a firm to organize its IB activi-
ties in a more transaction cost-efficient way by FDI
than by other means.
The OLI paradigm has been developed further,
mainly with reference to the so-called ‘knowledge
economy’. For example, Dunning and Lundan
(2009) argue that resource-seeking and market-
seeking activities are not sufficient and that strategic
assets are more knowledge-intensive than originally
assumed in IB studies of the MNC. They suggest
that, instead of transferring just ‘hard technologies’,

the transfer of ‘soft technology’, such as organization
structures and work practices, becomes increasingly
important and requires rethinking of traditional
approaches to studying MNCs. However, the OLI
paradigm ignores associated political processes and
power in the creation of knowledge and assets in the
MNC, or simply reduces them to principal agent
relationships (e.g. see Perrow 1986 for a critique). In
this view, managers (agents) need to be controlled by
owners (principals) in their internationalization deci-
sions because of the potential risk of opportunistic
behaviour and the threat of selfish profit- and career-
enhancing behaviour, especially if ‘assets’ are highly
specific and ‘uncertainty’ is high. A key problem
with such simplifications of human nature and
agency is that the economic rationality of agents is
described as universal, despite the paramount role of
social context, the social embeddedness of economic
actions (Granovetter 1985) and the influence of
diverse contextual rationalities (Morgan 2001a).
Moreover, the conceptualization of MNCs as pre-
dominantly economic systems is misleading,
because rationality is not only ‘bounded’ by incom-
plete contracts and opportunistic managerial behav-
iour, but also by the political nature of economic
decisions, which are based on political coalition
building and are therefore often sub-optimal, as
stressed by organizational theory pioneers Cyert and
March (1992, pp. 226–230).
In summary, we believe that economic studies
such as the eclectic paradigm neglect politics and
power in MNCs, despite the fact that they implicitly
assume selfish and cheating actors that need to be
controlled by either contractual or hierarchical

arrangements. While these studies refuse to acknowl-
edge that politics and power are natural aspects of
MNC decision-making, they do construct a certain
political reality. These scholars see management
(HQ) power as pre-given and legitimate as long as it
follows a universal economic rationality, downplay-
ing alternative economists’ insights that economic
rationality is always context-specific and politically
contested (Cyert and March 1992).
The evolutionary model: rationalistic1 and
normative view on power and politics within
the MNCs
While the economic approaches described above
have a rather simplistic understanding of the role
of MNC management, the so-called evolutionary
theory of the MNC asserts that the prime task of
management is to ‘select’ the best organizational
forms and internationalization strategies to ‘fit’ spe-
cific external environmental requirements (e.g. see
Westney 2009 for an overview). Grounded in a mix
1Rationalistic theories, either implicitly or explicitly believe
that managerial decision-makers are able to replace ‘irra-
tionality’ by technically or economic rational decisions.
Such a perspectives assume that better managers and organ-
izational design will help to avoid that irrational decisions
(see e.g. Fischer 2005).
228 M. Geppert and C. Dörrenbächer
© 2013 The Authors

Ta
bl
e
1
.
P
ow
er
a
n
d
p
o
li
ti
cs
in
m
a
in
st
re
a

m
IB
a
n
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so
ci
o
lo
g
ic
a
l
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M
N
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s

A
p
p
ro
ac
h
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ai
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p
ro
p
o
n
en
t/
s
T
h
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re
ti
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l

fo
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d
at
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M
ai
n
ar
g
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m
en
t
o
f
th
e
ap
p
ro
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h
T
h
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ro
le
an
d
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n
d
er
st
an
d
in
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o
f
p
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li
ti
cs

an
d
p
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th
e
ap
p
ro
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M
a
in
st
re
a
m
IB
st
u

d
ie
s
E
cl
ec
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th
eo
ry
D
u
n
n
in
g
(2
0
0
0
)
T
ra

n
sa
ct
io
n
co
st
th
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In
te
rn
at
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al
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at
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io
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s
ar
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sh
ap
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by
ow
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ip
(O
),
lo
ca
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(L
)

an
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(I
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as
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ar
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th
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t
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d
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h
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(1
9
8
9
);
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o

h
ri
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h
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al
(1
9
9
7
)
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vo
lu
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th
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co
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at

io
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re
q
u
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m
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Q
ta
sk
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tr
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F
o

rs
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n
et
a
l.
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B
ir
k
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a-
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cy
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et
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P
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n
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to
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in
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;
in
m
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d
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p
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as
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(H
Q
:
fo
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p
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;
su
b
si
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:
cr
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so
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)
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a
in
st

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n
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o
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it
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M
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s
ar
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h
ar
d
ly
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re

ss
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b
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an
d
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te
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p
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0
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,
2
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);
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s)
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P
o
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p
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it
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in
M
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s
ar
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ar
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b
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se
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p
ac
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it
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o
ci
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co

n
ce
p
tu
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at
io
n
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f
ac
to
rs
,
w
h
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h
fa
ll
s
sh
o

rt
to
co
n
ce
iv
e
ac
to
rs
’
id
en
ti
ty
an
d
in
te
re
st
s
© 2013 The Authors

of ideas based on evolutionary and contingency theo-
ries, the evolutionary theory of the MNCs argues
that the management of an MNC faces a ‘dilemma’.
As MNCs internationalize, management needs to
balance the demands of being globally efficient (an
argument which largely follows the assumption of
economic theories) with demands emanating from
the local host country environments in which their
subsidiaries operate.
Again, these studies rarely explicitly mention the
role of power relations in balancing the global and
the local, even while implicitly recognizing them as
being instrumental for the management of the MNC.
This is apparent in the highly influential work of
Bartlett and Ghoshal (1989).2 The researchers
suggest that in an MNC’s final so-called ‘transna-
tional stage of evolution’, balancing global efficiency
and local adaptation is not just a matter of structural
change, but also a matter of HQs managing culture
and building ‘global mindsets’ to enhance coordina-
tion and control (Bartlett and Ghoshal 1989). This
narrow focus on HQ control and top-down authority
structures fundamentally neglects bottom-up politi-
cal processes,3 which can vary in both space and time
(e.g. see Westney 2009, p. 129) and reinforce or
undermine established power structures in MNCs.
Even more recent evolutionary studies (e.g.
Nohria and Ghoshal (1997), who suggest studying
MNCs as ‘differentiated networks’) have neglected

the role of power and politics in the MNC, based on
their normative mantra that when managers learn to
effectively create and manage transnational cultures,
‘inter-functional and cross-divisional conflicts, the
dysfunctional effects and illegitimate aspects of poli-
tics and power will hardly ever appear – they may
even disappear’ (Dörrenbächer and Geppert 2006,
p. 253).
In summary, mainstream evolutionary approaches
to the study of MNCs, while implicitly recognizing
the role of power and politics in MNC evolution,
ignore or dismiss the political nature of the MNC’s
evolution as a social organization. In particular, they
see bottom-up political action as simply dysfunc-
tional and to be tamed by the HQ through normative
integration.
Research on business networks and subsidiary
entrepreneurship: explicit focus on power and
politics within MNCs, but still largely drawing
on rationalistic views
The work of Hedlund (1986) was pioneering and
inspiring for many IB scholars, including Bartlett and
Ghoshal (1989) when developing their ideas about the
evolution of MNC strategies and structures. In com-
parison with mainstream IB research, Hedlund made
us aware that the strategic approaches of MNCs are
more dynamic and might switch back and forth
between more or less hierarchical control and coordi-
nation mechanisms, which he called ‘heterarchy’ (see
also the discussion in Collinson and Morgan 2009). In
this context, heterarchy is not the same as what eco-
nomic studies discuss under the label of market coor-

dination but, rather, points to the strategic choices and
roles of subsidiaries, which cannot be fully controlled
by the HQ. This observation is picked up and devel-
oped further by Forsgren and colleagues (e.g. see
Andersson et al. 2007; Forsgren 2008; Forsgren et al.
2005). They begin by strongly objecting to the evolu-
tionary model’s basic premises that HQs’ formal
authority is the dominant source of power in MNCs
and that ‘global mindsets’ or shared values can be
built (Forsgren et al. 2005). Instead they propose a
business network approach to power and politics in
MNCs in which ‘it is normal for a struggle for influ-
ence to exist. . . . between the headquarters and the
subsidiaries, as well as among the subsidiaries’
(Forsgren 2008, p. 115). Hence, the business network
approach sees the MNC as a ‘federation’, where the
HQ is one player among others, which, rather than
being able to exert formal authority, faces the problem
of balancing the influence and power of subsidiaries
(Andersson et al. 2007). This approach further
assumes that subsidiary power is largely defined by
the subsidiary’s particular business network, as this
network constitutes a large proportion of the
resources on which a subsidiary can draw. Here, both
internal relationships with other units of the MNC as
well as external relationships (e.g. with customers,
suppliers, government agencies) are considered as
sources of power. To what extent such power resources
can be leveraged depends largely on a subsidiary’s
2There are, of course, exceptions, as we discuss later. Here,
we refer especially to the seminal paper of Doz and Prahalad
(1991) and the work of Birkinshaw and colleagues on sub-
sidiary mandate change. Most of the work of the latter schol-
ars, however, remains closely linked to the evolutionary
model of the MNC, and theory-building on politics and

power in the MNC has been limited and not in the analysis.
3Following Bélanger et al. (2003) the research methods
applied by Bartlett and Ghoshal (1989) are not suitable for
critically reflecting power relations and politics within
MNCs, as they seem dependent on the intentions and formal
discourse of the main corporate leaders’ (p. 473).
© 2013 The Authors
position in the network. Drawing on Astley and
Sachdeva (1984), it is assumed that the more central a
subsidiary’s position in the network, the greater its
power, i.e. its ability to influence the behaviour of
other network actors.
While the business network approach is an impor-
tant step in advancing the understanding of power and
politics, it only very recently and rather cautiously
went beyond the rationalistic concept of actors and
power relations in MNCs (e.g. see Forsgren and Holm
2010). Thus, the approach has largely remained struc-
turalist, with little understanding of how power is
socially enacted and how political manoeuvring is
grounded in micro-level interactions between power-
ful HQ and subsidiary actors.
A greater leap forward in this respect was made in
the works of Birkinshaw and colleagues on subsidi-
ary entrepreneurship. Similarly to the business
network approach, they understand the power of the

HQ – in reference to Weber’s classical definition
(Weber 1947) of bureaucratic power – as authority-
based power that is counterbalanced by the relative
power position of subsidiaries which, in reference
to resource-dependency theory, is based on the
control of critical resources (e.g. Birkinshaw 1996).
However, they go beyond the business network
approach to address in more detail how subsidiaries
and their key managers actively influence relations
with HQ and with fellow subsidiaries when develop-
ing and negotiating mandate changes. Here, Bouquet
and Birkinshaw (2008) refer to subsidiaries that
actively attempt to attract HQ’s attention, e.g.
through feedback-seeking or issue-framing. Simi-
larly a study by Birkinshaw and Ridderstråle (1999,
p. 152) reveals that HQ managers can effectively
block subsidiary initiatives by building up a finely
meshed corporate immune system that filters out any
initiatives that go against the HQ’s existing routines,
incur high risks, challenge the HQ’s power base or
unleash ‘fears of the unknown’ (Birkinshaw and
Ridderstråle 1999, p. 154).
In summary, the business network approach, along
with studies on subsidiary initiative-taking and entre-
preneurship, are quite important for understanding
the role of power and politics within MNCs, a phe-
nomenon that has either been neglected or only indi-
rectly referred to in mainstream IB research (see
also Dörrenbächer and Geppert 2006). The most
recent paper of Bouquet and Birkinshaw (2008) goes
far beyond the rationalistic arguments of previous
studies, in which HQ and subsidiaries were seen as
rational actors simply enacting their specific power
base. This paper, which combines economic and

sociological ideas, studies why and how some sub-
sidiaries in a lower power position are able to influ-
ence HQ decision-making (see also Dörrenbächer
and Gammelgaard 2011). It provides a much broader
view of political dynamics and power relations
within MNCs. This work bears a relationship to
mainstream sociological studies (most notably insti-
tutionalist studies), as discussed in the next section.
Power and politics within MNCs in
mainstream sociological studies4
We concentrate in this section on one of the most
prominent sociological research streams – institution-
alism – dedicated to the study of organizations,
including the MNC. Institutionalist scholars stress the
role of social institutions and different institutional
environments in the social constitution of MNCs.
There are two main streams of institutionalist litera-
ture on the MNC. Both stress that organizations need
to adapt and respond to their institutional environ-
ments, but they come to very different conclusions
about how organizational forms and management
practices are transferred across societal borders and
about the degree and impact of pressures for global
standardization on managerial and organizational
practices in MNCs (e.g. see Geppert and Williams
2006; Tempel and Walgenbach 2007). The first stream
was introduced by Westney (1993) and by Kostova
and colleagues (e.g. Kostova 1999; Kostova and Roth
2002; Kostova and Zaheer 1999) and draws heavily on
neo-institutionalist organization theories developed
in North America. The second stream draws on a
mixture of ideas introduced by European comparative
institutionalists such as ‘divergent capitalisms’ and
‘national business systems’. In contrast to the three

mainstream IB approaches, which apply rationalistic
ideas of how MNCs operate and function, insti-
tutionalist research argues that no organization
can be understood without understanding its social
embeddedness in the wider society. Institutionalist
scholars understand organizational rationality as
being socially constructed, but not in an ‘idealist’
manner, i.e. by purely stressing the role of human
factors such as cognition and norms, but by seeing
‘materialist’ institutional environments as driving
4Here, we should especially like to thank Dick Scott and
John Meyer for their useful comments on an earlier draft.
© 2013 The Authors
forces for internal organizational behaviour of MNC
managers (Ashcraft et al. 2012, p. 24).
North American neo-institutionalism: the power of
global standards and conflicting isomorphic pulls
on power structures within MNCs
North American neo-institutionalists are largely
interested in the diffusion, adoption and institution-
alization of organizational practices and structures
across national borders. They assume that dominant
ideologies and management ideas diffuse across the
globe as ‘best practices’ and will be adopted by
organizations, including MNCs (e.g. Meyer 1994).

Neo-institutionalists believe that such management
ideas and ideologies create isomorphic pulls not so
much because they are seen as more efficient, as in
rationalistic approaches, but because adoption is
seen as crucial in order to enhance an organization’s
legitimacy and thus its survival (e.g. DiMaggio and
Powell 1983; Meyer 2000, Scott 2001; Tempel and
Walgenbach 2007).
Isomorphic pulls forcing MNCs to transfer organ-
izational practices across the globe consist of regula-
tive, normative and cognitive–cultural pressures
(Kostova 1999; Scott 2001). Regulative pressures
refer to the influence of transnational regulatory
bodies and organizations such as the WTO; normative
pressures refer to the infusion of particular values
through a growing number of MBA alumni in (top)
management positions; and cognitive–cultural pres-
sures refer to the increasing number of globally shared
ideas and ideologies, such as market liberalization. At
the same time, this research argues that MNCs must
comply with the different expectations of the various
host country institutional environments in which they
operate when adopting and implementing certain
management ideas and practices across national
borders (Kostova 1999). It is clear that different exter-
nal institutional pulls from the organizational field
and host countries lead to tensions (Kostova and
Zaheer 1999). This is especially the case when insti-
tutional distance between the home country of an
MNC (where organizational practices originate) and
the host country (where organizational practices are
transferred) is greater (Kostova and Roth 2002). This
problem is discussed as institutional duality. However,
these scholars rarely discuss the obvious political
implications within MNCs that emanate from institu-

tional duality. Actor-related questions such as who
pulls, why and how, are completely neglected, owing
to an over-socialized concept of actors. They discuss
the role of ‘MNC power relations’ only in relation to
cross-border transfers of management practices, and
in a limited way. They argue that the ‘dependency’ of
a subsidiary on its HQ will influence the degree to
which the subsidiary ‘adopts’, ‘implements’ and
‘internalizes’ practices and ideas transferred by the
HQ (Kostova and Roth 2002, p. 230).
In summary, politics and power relations within
MNCs have been little addressed by North-American
neo-institutionalist approaches. Their focus is on the
power that external institutional pressures exert on
organizations, most notably pressures that emanate
from dominant management ideas and practices, and
pressures that emanate from host-country institu-
tions. The different interests, identities and behav-
iours of actors involved in legitimizing and/or
de-legitimizing certain global or local organizational
practices, as well as the political implications of such
processes, are hardly acknowledged (Tempel and
Walgenbach 2007). The same is true for country-of-
origin effects, which play an important role in the
approaches of European comparative institutional-
ists, which we discuss next.
European comparative institutionalist studies: the
role of diverse societal specific institutional
regimes on power structures within MNCs
European comparative institutionalist studies assume
that the type and degree of social and societal embed-
dedness differs significantly between capitalist

societies with effects on the internationalization
behaviour of MNCs. Hence, in comparison with
North American neo-institutionalists, research by
these scholars is not so much focused on universal
isomorphic institutional pressures leading to the
transfer of similar organizational practices, but rather
on how historically developed home and host country
institutional features – such as the financial, corpo-
rate governance, industrial relations, training and
skill development and innovation systems – are inter-
related with work and employment systems within
MNCs (e.g. see Geppert 2003; Whitley 2001).
European institutionalists typically differentiate
between liberal and coordinated market economies
(Hall and Soskice 2001). The organization sociolo-
gist Whitley (1999) provides perhaps the most dis-
tinguished typology. Based on the distinction of
various degrees of coordination in capitalist econo-
mies, he classifies six types of national business
systems: two more liberal types with low impact of
non-market coordination mechanisms (‘fragmented’
© 2013 The Authors
and ‘compartmentalized’), and four more coordi-
nated types of national business systems (‘industrial
districts’, ‘state organized’, ‘collaborative’ and
‘highly coordinated’) (Whitley 1999).

European institutionalists assume that MNC
behaviour with regard to internationalization depends
on the MNC’s country-of-origin. These scholars see
differences in power structures within a particular
national business system as not only explaining dif-
ferences in the internationalization strategies of
MNCs (Dörrenbächer 2000; Geppert et al. 2013;
Whitley 2001), but also how power and authority are
shared within MNCs (Whitley 2009), and especially
how the HQ controls its subsidiaries (Harzing and
Sorge 2003).
They argue, for example, that liberal types of
national business systems are characterized by the
direct control of owners (e.g. reflected in strong
shareholder value orientation) and a weak influence
of other external stakeholders (such as employer
and employee associations), combined with a strong
authority of top management and a weak influence of
lower-level management and employees. Accord-
ingly, research has shown that MNCs from liberal
national business systems (such as the USA) –
because of lower degrees of social commitment to
power sharing with various internal and external
stakeholders and pressure from stock owners to meet
short-term financial goals – have developed more
standardized organizational practices and transfer
them internationally as ‘best practices’ (Almond and
Ferner 2006; Geppert 2003).
In comparison, MNCs originating from more
coordinated national business systems are under-
stood to have more difficulties in standardizing and
transferring their home country developed idiosyn-
cratic organizational practices, because of greater
social commitments with stakeholders and because

host countries often do not ‘offer’ the same high level
of institutional support as the home country in terms
of skills development for lower-level managers and
employees (Whitley 2009). Moreover, this research
suggests that a lack of ‘complementarities’ between
home and host country institutions has led to ‘avoid-
ance strategies’, i.e. MNCs from liberal market
economies avoid investing in coordinated market
economies such as Germany because of ‘constrain-
ing’ host country institutions (e.g. see Tempel 2002).
Research also found evidence that MNCs originating
from coordinated market economies flee their
national business system. For example, German
MNCs selectively transfer home country work and
organizational practices to subsidiaries in less coor-
dinated emerging market economies, to escape insti-
tutional ‘constraints’ of the home country (e.g. see
Bluhm 2001; Dörrenbächer 2004).
In summary, European comparative institutional-
ists assert that the distribution of authority and power
within MNCs cannot be understood without reflect-
ing on their societal institutional features and foun-
dations, which differ significantly across countries.
This is an important message that is little addressed
in mainstream IB literature, including in neo-
institutionalist studies of the MNC. However, like the
other approaches discussed above, European com-
parative institutionalism neglects to bring power rela-
tions in HQ and subsidiaries to life and shed more
light on the ‘contests’ and dynamic political proc-
esses that both sustain and undermine the authority
of powerful managers and other stakeholders. Power
and politics are conceptualized in a rather static and
over-socialized way, in which interests and identities

are understood as being ingrained as key features of
the national business systems which have developed
in a path-dependent way.
Power and politics within MNCs –
emerging critical perspectives5
In the previous sections we have argued that main-
stream IB and sociological approaches either have
little to say about power in MNCs or conceptualize
it in a very specific managerialist and/or function-
alist manner. In our view, this is related to the fact
that the role of agency and its importance in under-
standing politics and power in MNCs is either
neglected or not fully explored. Economic theories
of the firm, including the eclectic OLI paradigm,
are interested mainly in actors that make efficient
decisions in order to minimize transaction costs
and increase the economic performance of the inter-
national ventures of the MNC (see also Haunschild
et al. 2009). Evolutionary scholars, including those
who study subsidiary entrepreneurship, adopt a
managerialist orientation to politics and power.
5We use the term ‘critical’ in this paper to refer to our
critique of mainstream IB and sociological studies in an
academic sense and not necessarily in the sense of Critical
Management Studies (CMS). We maintain this critique,
even though some of the studies discussed in this section,
which refer to post-colonial and discursive debates on
power and politics in MNCs, are certainly central for CMS
scholars.
© 2013 The Authors

They discuss power and politics in an implicit
manner as a function of management: managers
need to balance global–local dilemmas, and the HQ
must either give up power (need for local respon-
siveness) or centralize its power (need for global
integration) if strategy and organizational structures
do not fit with economic and task environmental
demands. The scholars studying entrepreneurship
and business networks, drawing largely on resource
dependency theory (Pfeffer and Salancik 1978),
are interested mainly in how either HQ or subsidi-
aries gain or lose power, applying rationalistic
premises to how top managers in the HQ or in
subsidiaries make decisions and negotiate deals.
In these approaches, actors either make rational
choices that lead to improved economic perform-
ance or they take sub-optimal decisions based on
irrational assumptions, leading to dysfunctional
results that are considered as a sign of inefficient
organization and management.
In contrast, both neo-institutionalist and compara-
tive institutionalist studies of the MNC stress that
managerial decisions are social context bound.
However, both institutionalist approaches are highly
focused on the ‘historical development and structural
contextualization of organizations’ (Reed 1996,
p. 43) and neglect to reflect on how structures and
institutions are locally produced and reproduced. In
short, the focus is on how macro-level institutional
logics shape power relations within MNCs, ignoring

interactions through which power relationships are
socially sedimented into relatively permanent and
stable authority structures and specific institutional
features (Fincham 1992). The emphasis here is on
socio-political processes, referring to aspects of
social agency which can stabilize but also destabilize
established power relation and authority, e.g. of the
HQ.
It is here where newly emerging perspectives
make an important contribution, by taking a socio-
political view that goes beyond mainstream studies
to open up new routes for studying power and
politics in MNCs. In this review, we refer to two new
developments in neo-institutionalist and comparative
institutionalist research, which see the study of
MNCs as a challenge for theory-building and call
for a more actor-centred approach with power and
politics at centre stage. We discuss these new devel-
opments, which Barner-Rasmussen et al. (2010)
described as ‘emergent critical perspectives’ of MNC
research, in the next two sections and also reflect on
what we can learn from these new developments
for the study of the ‘contemporary multinational’
(Andersson and Holm 2010), both conceptually and
empirically.
The MNC as a challenge for mainstream
neo-institutionalist theory: institutional
contradictions and emergent space for
political action
The first new development in institutionalist theories
about the MNC can be seen in a recent ‘provocative’
essay by Kostova et al. (2008), which questions

whether basic ideas of neo-institutionalism can be
uncritically applied to the study of MNCs. They
argue that, despite being subject to institutional
influences, ‘MNCs have a very different institutional
story that fits better the conditions of equivocality,
ambiguity, and complexity’ (Kostova et al. 2008, p.
997). Reflecting critically on neo-institutionalist key
ideas, they conclude that a ‘blended institutional per-
spective’ is needed to study MNCs, leaving space for
understanding the role of social agency and power
and politics. The main argument is that the MNC as
a collective actor has the power to influence transna-
tional and national institution-building, and that its
subunits and individual key actors are not just
responding to a variety of institutional pressures and
‘pulls’, but that MNCs are political arenas where
powerful actors ‘must make sense, manipulate,
negotiate, and partially construct their institutional
environments’ (Kostova et al. 2008, p. 1001). This
view is in line with Morgan’s (2001b) research,
which argues that MNCs do not just respond to regu-
lative institutional pressures, but actively influence
transnational standard setting, e.g. product and legal
standards such as ‘fair dealing’ (Morgan 2001b, pp.
228–247). This research comes close to the focus of
our paper, by showing that MNCs cannot be seen as
coherent organizations that can be controlled top-
down and mainly respond to external economic and
institutional pressures, leaving no ‘space’ for social
agency.
In this approach, social agency comes into play
for two reasons. First, the agency of individuals
becomes important, because isomorphic institutional
pressures are seen as ‘limited’ in the case of the
MNC, which ‘creates a rich landscape of diverse

practices and patterns of activity’ (Kostova et al.
2008, p. 999). This ‘institutional freedom’ provides
actors with strategic choices (Child 1972), an issue
that links this debate to earlier debates conceptual-
izing MNCs as transnational social spaces, which is
© 2013 The Authors
discussed in more detail in the next section. Second,
this approach assumes that actors’ strategies to
achieve legitimacy make MNCs not more, but less
similar (Kostova et al. 2008, p. 1000). This argument
touches directly on the political dimension of social
agency and institution building by arguing that insti-
tutions are not just constraining agencies, but can
also be enabling factors, a fact that has political
implications. The political implications that Kostova
et al. (2008) have in mind are twofold. First, they
emphasize the ‘symbolic’ aspects of interaction
processes in MNCs in which an image or identity is
presented to outside stakeholders even though this
does not necessarily mean that transferred ‘best
practices’ are actually implemented. In addition,
they stress that, because MNC contexts are less
homogenous than originally assumed, actors must
increasingly deal with ‘institutional contradictions’,
creating room for ‘praxis’ (see also Seo and Creed
2002), i.e. room for political action to challenge
existing or established institutional regimes or
organizational practices.

This new institutionalist approach argues that the
key tools of mainstream neo-institutionalist studies
of the MNC (e.g. the role of isomorphism and how
legitimacy is achieved across national and intra-
organizational borders) need to be revised. A more
actor-centred approach is needed to understand the
dialectics of institutional stability and change, which
brings the role of political processes and power
relations in the MNC from the shadows into the
limelight. This is crucial, because collective and indi-
vidual actors often have different identities and inter-
ests, creating (transnational) social spaces, which are
increasingly ‘contested’, especially when MNC strat-
egies narrowly focus on financial control mecha-
nisms and global standardization of organization
and work.
The MNC as a challenge for comparative
institutionalism: emergence of politically
contested terrains
The second new institutionalist development, which,
as with the above approach, we call ‘socio-political
studies of the MNC’, introduces ideas about the MNC
as a ‘transnational social space’ (Geppert and
Williams 2006; Morgan 2001a) and a ‘contested
terrain’ (e.g. Edwards and Bélanger 2009; Ferner
et al. 2006). Similarly to Kostova et al. (2008), this
socio-political approach challenges mainstream
studies of the MNC by stressing that these are not
unique organizational forms but multi-level and
diverse organizations, which must socially and soci-
etally embed their managerial and organizational
practices locally. This is actually a more difficult

process in the case of the MNC, because the diversity
of contextual rationalities of both collective and indi-
vidual actors is much higher than in a domestic firm.
This latter argument points to the political
dimensions of emerging transnational social spaces
within and through the various cross-border activi-
ties of the MNC. Here, different actors within
MNCs, their particular identities and interests, as
well as the social constitution of their agency come
to the fore (cf. Dörrenbächer and Geppert 2006,
2010). This perspective highlights the role of the
key actors’ career patterns, their professional and
career ambitions, their specific resource mobiliza-
tion strategies and their political sensemaking
approaches. This research also shows that global
‘best practices’ always need to be locally adapted,
which involves often lively and dynamic political
activities of key actors, making the MNC a ‘con-
tested terrain’. This also means that the process of
political contestation is not just an ‘effect’, follow-
ing the ‘logic’ of relatively stable and coherent
home country or host country institutional features,
as mainstream comparative institutionalist scholars
believe. Multinational corporations are indeed
social constructs enacted by powerful actors, which
bring diverse and sometimes contradictory ‘contex-
tual rationalities’ into play when contesting and
negotiating the methods and degrees of local
adaptations.
Taking a bottom-up view, the analysis of the
MNC as transnational social space focuses on the
process and political nature of the internal function-
ing and structuring of the MNC, which is consti-
tuted by a ‘set of relations between a range of

actors with their own powers and interests. Decision
processes are characterized by political bargaining
and negotiation’ (Morgan 2001a, pp. 9–10). Schol-
ars studying the MNC as a ‘contested terrain’
suggest conceptualizing them as a political system,
referring to earlier organization studies (e.g. Cyert
and March 1992; Mintzberg 1985; Pettigrew 1973),
as well to employment relations studies (Edwards
and Bélanger 2009), which have consistently
focused on the political nature of management and
organizations, in contrast to large parts of organiza-
tion studies. They understand MNCs as being ‘coa-
litions, fragmented not only between competing
social forces but across national institutional
© 2013 The Authors
domains, and along various “horizontal” cross-
national organizational dimensions’ (Ferner et al.
2006, p. 9). These socio-political studies of the
MNC feature three key ‘distinct characteristics’ of
the ‘contested’ nature of transnational social spaces
in MNCs.
First, they argue that the formal authority and
power structures of MNCs are not ‘footloose’, but
fragmented, bringing together divergent collective
and individual actors with different histories and
experiences. This is even the case in highly glo-
balized industries and MNCs, and is especially

important for MNCs that are products of mergers and
acquisitions. Therefore, these studies suggest that,
instead of concentrating on formal authority and
power structures, MNCs should be studied as ‘fed-
erations of national companies where expertise and
knowledge rested in national contexts’ (Morgan and
Kristensen 2009), and where the HQ has little ability
or interest to exert full control. The HQ’s ability to
impose hierarchical control and globally standard-
ized organization structures and processes is highly
limited, even when they attempt otherwise. Accord-
ingly, Kristensen and Zeitlin (2001), based on an
in-depth case study, argue that the MNC’s ‘ “admin-
istrative heritage” continues to be diverse and rooted
in the experience that local actors had gained from
their involvement in the games of diverse regional
and national business systems’ (Kristensen and
Zeitlin (2001, p. 188). This includes not just the
subsidiaries, but also the HQ, where key actors have
had their own experiences when internationalizing
across borders.
Second, the idea of political contestation stresses
the importance of local resource-building activities
in order to both resist and negotiate the transfer and
implementation of organizational practices and strat-
egies developed elsewhere. Studies have illustrated
how local managers and employees in certain local
and national contexts have more opportunities to
draw on resources and mobilize the political support
of internal and external stakeholders in processes of
political contestation: for example, with the HQ and
governmental bodies about global restructuring and
subsidiary mandate development (Geppert and
Williams 2006; Kristensen and Zeitlin 2001). This
research has shown that in transnational corporations

(which it was assumed are better equipped to deal
with the global–local dilemma) local resource-
building is of utmost importance and requires skilful
political activities (e.g. see Bélanger et al. 2003). For
these political activities, local actors draw on distinct
societal institutional features, including supportive
industrial relations and high quality skill develop-
ment systems, which we still find in certain regions
and manufacturing sectors of Germany (e.g. see
Geppert and Williams 2006). However, this research
also suggests that societal institutional features are
only supportive for local actors in certain core
sectors of the German economy, and that in other
sectors, e.g. food retailing (Wortmann 2004) and fast
food (Royle 2002), local actors have fewer opportu-
nities to resist.
This brings us to the third distinct characteristic
of contestation that is highlighted in these socio-
political studies – the crucial role of social actors in
micro-political games played within MNCs. Pio-
neering research, especially by Kristensen and
Zeitlin (2001, 2005) and by other authors taking a
socio-political approach (e.g. Geppert and Williams
2006) has suggested that political contestation can
be studied in the various micro-political games
found in MNCs. Most studies have focused on the
study of micro-political games played between the
HQ and its subsidiaries to influence budget alloca-
tion, mandate change and relocation decisions
(Dörrenbächer and Geppert 2010). The analysis of
micro-political game-playing starts from the bottom
and asks how different identities and interests of
key actors stabilize and destabilize established insti-
tutional, cultural and organizational structures, and

not the other way around as in mainstream institu-
tionalist approaches. Morgan and Kristensen’s
(2006) research is a good example of how the role
of diverse identities and interests can be analysed.
They distinguish between ‘boy scout’ strategists and
‘subversive’ strategists, who respond differently to
increased HQ pressures, e.g. to introduce bench-
marking systems and ‘coercive comparisons’
between locations, designed to meet increasingly
short-term expectations of shareholders. The
authors argue that ‘boy scout’ approaches are often
narrowly focused on financial control, imposed by
the HQ, which can lead to emergence of ‘transna-
tional battlefields’ within MNCs in extreme cases. It
is shown too that ‘boy scout’ approaches might
undermine the long- and mid-term capabilities of
subsidiaries to build resources of entrepreneurship,
the basis of being a powerful player in the micro-
political games of internationalization. ‘Subversive’
strategies – those based on high resistance, aggres-
sive bargaining and strong local support – might be
more suited to maintaining and enhancing local
resources to play ‘the game’.
© 2013 The Authors
Another example of this approach can be seen in
recent research on political sensemaking in MNCs
operating in post-communist countries, by Clark
and Geppert (2011). This research stresses that

different identities of subsidiary key actors can be
‘local patriotic’ or ‘cosmopolitan’ strategic orien-
tated, which leads to different approaches of
political strategizing when negotiating with HQ
managers, who also have their own distinct interests
and identities, leading to either ethnocentric or
more polycentric strategies in negotiations with
local managers. The study identifies four scenarios
or different ‘political sense-making’ processes,
which create either institutionally and politically
stable transnational social spaces based on develop-
ing mutual interests and shared identities, or more
unstable and conflicting transnational social spaces
drifting into ‘disorder’.
An inroad into the distinct interests and identities
of HQ managers is provided by the literature that
revolves around the notion of a transnational capital
class. Despite strongly differing views about to what
extent the capitalist class has/will become transna-
tional, it is taken as common sense in the debate that
corporate executives (and owners) of large MNCs
create inner circles of power (Carroll 2010; Murray
and Scott 2012; Robinson 2004; Sklair 2001).
According to Higley and Burton (2006), common
interests and a shared code of behaviour emerges
through interlocked networks of communication and
influence and a basic value agreement. Such
common interests, e.g. to follow a global logic of
accumulation rather than a national one, are assumed
to be manifested in the corporate chain of command
and translated into company policies which trigger a
variety of conflicts, e.g. with strongly locally ori-
ented actors (Scott 1997). More recently, a number of
authors have stressed that changes in corporate gov-
ernance, including the decreasing role of banks and

increasing role of a few mutual funds in financing
large corporations, have led to notable shifts in the
strategic agenda of large MNCs (Carroll 2010; Davis
2008). Thereby, a stronger emphasis on shareholder
value, and subsequently on benchmarking and cor-
porate restructuring is seen to infuse more and
heightened conflicts into the transnational social
space constituted by MNCs (Froud et al. 2002;
Lazonick 2012).
In summary, in contrast to most mainstream
studies focused on how MNCs are managed, struc-
tured and institutionally constrained, the new critical
perspectives reviewed above bring attention to the
role of the diverse interests, ideologies and identities
of key actors initiating and participating in micro-
political games. From this viewpoint, power relations
are dynamic and relational, interactively created not
just by key actors (managers and owners), but also by
employees, including international trade unions and
their representatives (e.g. Edwards and Bélanger
2009). The latter are often neglected by the manage-
rialist focus of mainstream IB research, but are
increasingly understood as a crucial part of local
resource-building activities and a resource for
organizing local resistance to centrally imposed HQ
policies.
In the next and concluding sections, we systemati-
cally discuss political game-playing within MNCs.
We look in detail at how two micro-perspectives in
the study of MNCs – micropolitics and discursive
analysis – can be combined by outlining a three-
dimensional framework for the study of political
game-playing. Finally, we highlight some ques-

tions for further research in the critical study of
MNCs.
Game-playing within MNCs:
micro-political and
discursive processes
In the previous section, we discussed emerging criti-
cal perspectives, which we refer to as socio-political
studies of MNCs. These critical studies show how
mainstream scholars’ views that power is ‘stored’ in
(external) institutional and (internal) organizational
structures fall short in capturing the ‘relational’,
dynamic and processual aspects of organizational
power. We have stressed that power relations in
MNCs are not simply the outcome of ‘better’ man-
agement designed to avoid the inefficiencies of
political struggles and infightings. Nor is power just
the outcome of ‘better’ and more efficient allocation
of scarce (power) resources, as emphasized by evo-
lutionary studies of the MNC. By contrast, we see
power relations within MNCs as not pre-given or
institutionally determined or the outcome of objec-
tive managerial decision. Rather, we believe that
power is the result of continuously socially con-
structed dynamic relationships among key actors,
who make use of existing power resources and, in
doing so, stabilize and destabilize established power
structures.
In order to capture these micro-processual aspects
of political strategizing and organizational power
© 2013 The Authors

relations in MNCs, we suggest applying the meta-
phor of game-playing. Game-playing can be seen as
an interactive process which ‘operate(s) through a
network of relations, micro-politics and capillaries of
power’ (Clegg et al. 2006, p. 254). A key question
here is how power is exercised in games played. We
believe that the rules of games are not just con-
straints, but also enable the key players to play politi-
cal games (Dörrenbächer and Geppert 2009). Our
review of the literature identifies two research
streams that use game-playing to examine power
relations and political contests in MNCs: (a) research
on the nature of micro-political games in MNCs,
which looks at political struggles and strategizing
among key actors in HQ and subsidiaries and (b)
research on language games,6 which examines the
role of discourses and discursive processes within
MNCs.
Let us briefly examine the conceptual and meth-
odological concerns of both streams before conclud-
ing this paper by suggesting a framework for the
study of political game-playing in MNCs that com-
bines key ideas from both streams. Micro-political
perspectives draw on the seminal work of Burns
(1961/1962), March (1962) Crozier and Friedberg
(1980) and also on Küpper and Ortmann (1992), and
have been applied to MNCs in research on political
game-playing about subsidiary role development
and initiative-taking (e.g. see Dörrenbächer and
Gammelgaard 2011 and Dörrenbächer and Geppert

2009). The main focus is on the different interests of
various key actors within the HQ and within subsidi-
aries, who develop various political strategies in
order to initiate, influence, resist and/or negotiate,
e.g. the change of mandates or coercive comparisons
(Dörrenbächer and Geppert 2009; see also Morgan
and Kristensen 2006).
Studies on language games draw on theories of
power, especially of Foucault (1980) and Critical
Discourse Analysis (CDA) (Fairclough 1997), and
focus on the power of discourses and political sense-
making, e.g. the political role and impact of stories
and storytelling and identity constructions (e.g. see
Vaara and Tienari 2008; see also Geppert 2003).
Language games have been analysed mainly as dis-
courses and narrative constructions, reflecting power
relations as well as political discourses in situations
of cross-border mergers and post-merger situations
(e.g. see Riad 2005; Vaara et al. 2005). A number of
studies have examined post-acquisition situations as
critical events that trigger discursive contestations
between HQ and subsidiaries (Vaara et al. 2005) as
well as political sensemaking processes among key
HQ and subsidiary actors (Geppert 2003; Vaara
2003).
The two camps apply different conceptual and
methodological approaches to the game metaphor.
The micro-political camp is more interested in
analyzing micro-political strategizing approaches
and the role and interests of key actors, both at
the HQ and at the local subsidiary level. Scholars
use comparative case studies in order to illustrate
and compare micro-political game-playing, based

primarily on in-depth interviews, triangulating these
with company and various other data, including
media sources. Discursive studies on language
games concentrate more on the narrative construc-
tion of the MNC (Vaara and Tienari 2011), often
focusing on discursive contests between acquiring
and acquired companies in post-merger situations.
One focus of analysis is on the dialogical dynamics
of nationalist, globalist and local (e.g. Nordic)
storytelling approaches and how these inform
discursive struggles between the HQ and the newly
acquired subsidiaries (ibid). Researchers apply
‘multi-method’ approaches, combining CDA, ethno-
graphic and antenarrative methodologies when
analysing and interpreting texts, vocabularies and
rhetorical strategies of key actors (Vaara and
Tienari 2011).
Concluding comments and
suggestions for future research
Having described differences in research traditions,
methodology and focus of analysis, we conclude by
suggesting that future research on power and politics
in MNCs could gain from combining the idea of
language games with that of micropolitics. For this
purpose, we find especially useful the ideas of Hardy
(1996), Clegg 1989 and Clegg et al. (2006) on organ-
izational power, which have not been systematically
applied to the MNC context.
A first step in combining these conceptual
approaches is to distinguish between ‘surface’ and
6When referring to language games, we refer to the defini-
tion of Rindova et al. (2004), who argue that language

games focus on how language and discourse organize
experience and reality. However, given our interest in poli-
tics and power, we also refer to Foucault (1982, cited in
Clegg et al. 2006, pp. 254–255) and would like to stress that
the study of language games is also about how power is
exercised in organizations. See Clegg et al. (2006) for a
more in-depth discussion on this matter.
© 2013 The Authors
‘deep’ structures of rules, which trigger and
inform micro-political game-playing, as suggested
by Clegg et al. (2006, pp. 294–298) in reference to
Wittgenstein. This means that when players (actors)
make sense of critical micro-events on the ‘surface’,
e.g. changes in subsidiary mandate responsibilities,
they also reflect on and make use of established
(‘deeper’) rules, which formally or informally allow
or sanction strategic decisions of subsidiary manage-
ment, e.g. about investment and budgets. We now
look in more detail at three dimensions of organiza-
tional power that are important for the study of politi-
cal game-playing.
First, we emphasize that political game-playing in
MNCs is triggered and informed by critical events
(or episodes). This points to the first dimension of
organizational power, which Clegg et al. (2006) call
‘episodic power’. This relates to the ‘surface’ of
organizational power structures, which are the situ-

ated actions, texts and resources used in games, as
well as how games manifest themselves and are
played out on the stage of the MNC. Next, the second
and deeper power dimension consists of the rules of
the game themselves. Questions that need to be
asked here are: What are the rules? Who sets them?
and How far are key subsidiary actors involved in
these processes? The third and deepest dimension of
organizational power relates to the patterns of domi-
nation and the societal dimensions of MNC power,
e.g. the role of post- and neo-colonial thought or
the pervasive financialization of capitalist societies.
The latter dimension is about the influence of new
transnational elites within and around MNCs. These
elites are often seen as representatives of a new trans-
national capitalist class that guards dominant ideolo-
gies, such as the primacy of ‘shareholder value’ (e.g.
see Murray and Scott 2012). For example, extraordi-
nary bonus systems for investment bankers and
CEOs have maintained their central part in the rules
of the game, despite the destructive effects of the
current financial crisis on many national economies
(see Table 2 for overview).
Now we explore some questions of political game-
playing in MNCs in relation to the first dimension of
organizational power – episodic power, i.e. the most
visible contests and games played in the MNC. These
episodes are not random, as Clegg et al. (2006)
remind us, but are related to deeper organizational
power relations within the MNC and forms of domi-
nation shaped by post- and neo-colonial histories
between HQ and certain local subsidiaries (e.g.
Vaara et al. 2005). A key research question here is:
What types of games are ideally typically played in

the MNC? Research has focused on games related to
mandate changes (Dörrenbächer and Geppert 2009),
subsidiary initiative-taking (e.g. Dörrenbächer and
Geppert 2010) or the transfer of HR and employment
practices within MNCs (e.g. Ferner et al. 2006).
Other language game-focused research concentrates,
e.g. on games played in international expansion strat-
egies (Hartt et al. 2012), in post-merger situations
regarding the future corporate language (e.g. Vaara
et al. 2005) and in the use of stories to legitimate and
resist post-merger changes (Vaara and Tienari 2011).
Table 2. Framework for research of micro-political game-
playing in MNCs
Dimensions of power Analytic focus Key research questions
Episodic power
(the actions, texts and resources used in
games – how games manifest themselves,
how they are played out on the stage of the
MNC)
• Games played between HQ and subsidiaries
related to situations of e.g. mandate
changes, subsidiary initiatives, post-merger
integration, coercive comparisons between
subsidiaries
• Who wins and who loses the game?
• What are the (local and MNC-internal)
resources on which key actors can draw?
Rules of the game

(what are they, who sets them and how far are
key subsidiary actors involved in this
process)
• Constitution of rule setting, implementation
and change, i.e. is change of rule negotiated,
imposed by HQ
• Skills, identities and interests of key actors
in HQ and subsidiaries to legitimate or
resist setting and changing of rules in the
games played
• Who set the rules, just the HQ?
• What are the rules?
• What are the interests and identities of
the key actors in playing the games?
Domination
(the societal dimensions of organizational
power, e.g. post- and neo-colonial or
financial capitalism)
• Dominant and counter vocabularies
• Legitimizing and counter frames for e.g.
financialization and standardization
• Post- and neo-colonial hegemonies
• Why are the rules in place and have
been changed?
• What are the aims of the games played?

Adapted version of table by Clegg et al. (2006, p. 298).
© 2013 The Authors
In future research, ideas from both camps could be
applied to develop an improved understanding of
how games in MNCs are increasingly triggered by
the application of coercive comparisons and bench-
marking systems (e.g. see Ahonen 2009; Morgan and
Kristensen 2009).
Moving to the second dimension of organizational
power – the rules of the game – political games
played in MNCs are usually triggered by the setting
and implementation of new rules and the change in
established rules, because these decisions usually
challenge established power relations between the
HQ and the subsidiaries. Episodes such as change
of mandates or corporate language can have both
empowering and disempowering effects on key
players within local subsidiaries. However, even
when the HQ usually has the formal authority to set
rules and the means of control, whether or not sub-
sidiaries play by these rules and meet performance
targets, the second (deeper) dimension of analysis
requires taking a closer look at the rules themselves
and how they are set. This is related to the skills and
identities of key actors when legitimizing or resisting
the implementation of new rules or the change of

established rules. Thus, micro-political game-
playing is also about interpreting and reinterpreting
the rules of the game in the process of playing. It is
not always clear what the rules of the games are
before actors start interpreting, questioning and
sometimes resisting existing or new rules, e.g. in the
case of mandate changes. That is why the skills and
identities of key actors come into play, as well as
interest differences between key players, e.g. in the
subsidiary which might not like the change of rules
of the game when HQ proposes mandate changes
(Dörrenbächer and Geppert 2009) or the change
of the corporate language after a merger (Vaara
et al. 2005). Key players might decide to mobilize
resources internally and externally to resist these
changes, because career prospects or path might be
affected because of a lack of corporate language
skills (Vaara et al. 2005). However, in order to play
the game successfully, key actors need various types
of skills (e.g. political, rhetorical, social networking
skills). These social skills put certain key actors in
prominent positions as powerful brokers and players
in game-playing between subsidiaries and HQ. A
final, important question is whether the HQ is willing
to negotiate or, rather, imposes new rules or rule
change, and whether local actors are able and willing
to negotiate if invited by HQ (e.g. Clark and Geppert
2011).
Finally, we move to the third dimension of organ-
izational power – patterns of domination in game-
playing. Neo-institutionalists have stressed that
global standardization is the outcome of isomorphic
pressures (e.g. see Tempel and Walgenbach 2007)
and that MNCs might decide to implement new
financial accounting measures to meet shareholder

expectations (e.g. Geppert 2003). In this view, game-
playing might be triggered by increasing global
isomorphic pressures on large business firms to
implement financial control measures (Fligstein
1990). Moreover, research on language and power
refers to post-colonial theories of power (Prasad
2003). Accordingly, research by Vaara et al. (2005)
stressed that language policies and related internal
contests between HQ and subsidiaries might encour-
age the reproduction of post-colonial and creation of
new colonial identities and conflicts.
Last, a word of caution. Students of power and
politics, when analysing and linking the third dimen-
sion of power back to the other two, should be careful
that pressures of isomorphism and forms of domi-
nance are not interpreted one-sidedly, as determi-
nants of political game-playing within MNCs. Future
research needs to carefully examine alternative
forms and dynamics of political strategizing, based
on counter vocabularies and counter frames used
by powerful actors in political game-playing in
contemporary MNCs. This is especially important in
the aftermath of the current financial and economic
crisis, which questioned the hegemony and isomor-
phic pressures of stock markets. This has now opened
up some interesting new routes of critical studies on
the transnational capitalist class and financial elites
(Carroll 2010; Davis 2008; Murray and Scott 2012).
Given how the financial crisis has affected us all,
we would argue that scholars should reflect more
critically on how internal micro-political processes
(game-playing) are intertwined with deeper meso-
level (MNC) and macro-level (societal) power struc-
tures. When actors and active agency are taken into

account, it becomes apparent that these interrelation-
ships are more dynamic, i.e. messy and lively, than
often assumed in established rationalistic views of
power and politics in MNCs.
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