Digitalization and Corporate Parenting Styles of Multinational Corporations

International Journal of Organizational Analysis. 2023. Vol. 31. No. 6. P. 2359–2371.

Igor Gurkov, Filinov N.

Abstract Purpose – This paper outlines the current and future influence of digitalization on corporate parenting styles of multinational corporations. Design/methodology/approach – We employed conceptual modeling in this study. Findings – We identified five types of corporate parenting styles (Hypnos, Cronus, Rhea, Zeus, and Athena). The overall impact of digitalization on corporate parenting styles is related to new, formidable opportunities for decreasing costs and increasing the efficiency of the intra-corporate transfer of knowledge and talent. Furthermore, digitalization leads to greater tightness in subsidiaries’ performance targets, and greater intensity of control over subsidiaries’ activities, to lower degrees of subsidiary autonomy and a lower level of trust between the corporate headquarters (CHQ) and subsidiary managers. These effects endanger the existence of two corporate parenting styles (Hypnos and Athena) and significant changes for other three corporate parenting styles. Practical implications Digitalization may lead to more homogeneous corporations, with the lower variety of corporate parenting styles and the greater centralization of decision-making in corporate and regional headquarters and stronger control on operations and performance of subsidiaries. Increased opportunities of horizontal value transfer (knowledge) within the corporation will present an additional competitive advantage of subsidiaries of multinational corporations. The increased ability and willingness of corporate and regional headquarters of value appropriation from subsidiaries in different forms (profit, revenues, knowledge, and talent) will force subsidiaries to use that additional competitive advantage to become more aggressive competitors in local and global markets.

Keywords: международные корпорации, value creation, создание стоимости, multinational corporations, corporate parenting styles, digitalization, value appropriation, дижитализация, корпоративные родительские стили, извлечение стоимости