Keywords

Introduction

Multinational companies (MNCs) are network organisations consisting of a headquarters and often many and various kinds of subsidiaries operating in cross-border business networks (Hedlund, 1986). In such types of international organisations, their management involves complexity that researchers and managers have approached through, for example, questions of organisational design (Bartlett & Ghoshal, 1989; Pedersen, Devinney, Venzin, & Tihanyi, 2014). Organisational design influences the ways in which a firm operates both in local customer networks and within broader industry networks. An additional dimension affecting its ways of operating is whether the MNC is a family firm. In such cases, familiness shapes the behaviours and decisions of the firm, influencing the design of its international operations (Chrisman, Chua, & Sharma, 2005; Kontinen & Ojala, 2012) but there is scant research with primary attention to familiness of MNCs. It has been suggested that family firms maximise socioemotional wealth (Berrone, Cruz, & Gomez-Mejia, 2012), and a values-driven approach is an important feature of family firms (Chrisman et al., 2005), but the approach becomes complicated in MNCs with units in different and distant locations (see Lubatkin, Schulze, Ling, & Dino, 2005). In the present study, we examine the management model emerging through the enactment of family values in different MNC units.

The concept of a management model draws attention to the choices a firm internally makes about how work is accomplished when attending to micro-level strategic and operative processes (Birkinshaw & Ansari, 2015). We will use the concept to characterise the managerial principles vocalised and demonstrated by the headquarters and emerging in practice at the organisational unit level in a family MNC. This allows us to uncover the ways practice and, in particular, enactment of values, produce management models instead of focusing on how managers develop management praxis (cf. Vaara & Whittington, 2012; Whittington, 2006). Furthermore, the management models grow out of practice by individuals representing the firm, and thus, multitudes of management models co-exist within firms (Birkinshaw & Ansari, 2015). Overall, little attention has been given to family influence in the operations of MNCs, that is, the later phases of internationalisation, and the challenges in managing a multinational network organisation through family values. To uncover the complexities of managing a family MNC, the research question of the study is as follows: How is a values-based management model of a family MNC enacted in the practice of its units?

Theoretically, we rely on the network view of MNCs and use the practice-oriented management model as a lens through which to analyse how family values are vocalised and enacted. In this way, we can elaborate on the values-defined interface between the internal and external structures of a family MNC as a practice-based design issue. In the empirical part of the study, we examine a family MNC and three of its subsidiaries in Sweden, Russia and the USA. Family MNCs are particularly interesting settings for analysing management models because the headquarters of the various firms tend to emphasise a specific management model as the global way of doing business (see Kontinen & Ojala, 2012). At the same time, local subsidiaries need to develop their management models to fit into particular local communities (Marquis & Battilana, 2009). We rely on interview data to track how the management model develops and is enacted in different ways within an MNC. As a result, we illustrate family values as the nexus that guides operations and sets the direction of the firm, but they take different manifestations in the management models of the subsidiaries.

The contribution of the study is that it elaborates on the informal and underlying processes of internal organising in simultaneously controlled and independent ways within the units of globally operating family MNCs (see Birkinshaw & Ansari, 2015). Furthermore, through attention to the different manifestations of values-based management principles in the practices of the subsidiaries, we develop a standardisation versus local adaptation view of MNC design (see Bartlett & Ghoshal, 1989; Meyer, Mudambi, & Narula, 2011) further through defining its micro-level determinants. The managerial contribution of the study is bound up in the discussion of how such dynamics can be utilised for coordinated differentiation when organising a network of international sales subsidiaries.

Values-Based Management of a Family MNC

We approach the family MNC as a network organisation to better capture the challenges of managing a group of individual organisations embedded in various local networks in which the firm’s headquarters is an outsider (Forsgren, 2008) and the subsidiaries’ local environments are emphasised in their operations (Nell, Ambos, & Schlegelmilch, 2011). We then connect this approach to views of familiness in the internationalisation of firms. Towards the end of the section, we propose a values-based management model of a family MNC using the lens of a management model with a practice approach to organisations.

Family MNCs as Internationally Operating Network Organisations

MNCs have evolved from bureaucratic and formal headquarters-led organisations towards increasingly acknowledging the informal and networked relationships at their core (Kostova, Marano, & Tallman, 2016). According to network perspective on MNCs, an MNC is a complex web of interdependent relationships within which individuals operate (Forsgren, 2008). Each subsidiary is acknowledged as firmly embedded in its own local network of relationships, which differ from the networks of other subsidiaries and may develop rather independently from headquarters due to differing business conditions and social and cultural environments (Forsgren, 2008; Ghoshal, Korine, & Szulanski, 1994). The network form of a company in itself is a strategic and competitive device intimately connected to the development of the firm’s operations (Cenamor, Parida, Oghazi, Pesämaa, & Wincent, 2019).

Managing MNCs is a question of managing the often conflicting forces initially captured in the integration-responsiveness (IR) framework (Prahalad & Doz, 1987). According to it, MNCs need to coordinate and integrate activities across borders, and subsidiaries simultaneously need to respond to demands arising from the complex nature of economic, competitive and market forces in the local environment. The need for headquarters to control the development of the MNC stems from the occurrence of strategically inconsistent directions in which subsidiaries might develop (Holm, Johanson, & Thilenius, 1995). Simultaneously, sufficient independence motivates subsidiary managers to establish local relationships for competitive opportunities and contextual risk reduction (Andersson, Forsgren, & Holm, 2002; Luo, 2001). The extent to which subsidiaries become embedded in their local environments influences the possibilities for making local innovations, while on the other hand, the internal embeddedness of subsidiaries within the MNC is crucial for turning local innovations into global innovations (Isaac, Borini, Raziq, & Benito, 2019). Coordinating relationships and organisational designs has been a challenge for global companies throughout their existence (Westney, 2014; Wolf & Egelhoff, 2013).

Successfully managing MNCs requires knowledge located inside and outside the whole network organisation (Cenamor et al., 2019). Quite often, a firm’s headquarters lacks sufficient knowledge about the actions of its subsidiaries (Vahlne, Schweizer, & Johanson, 2012). Subsidiaries do not always welcome involvement by headquarters or its interference with local activities (Decreton, Nell, & Stea, 2019) and in an attempt to manage the global organisation, a firm’s headquarters may end up demotivating subsidiary managers and employees (Foss, Foss, & Nell, 2012). The network MNC structure creates more occasions for potentially harmful intervention through a low degree of formalisation and the high level of decision-making autonomy granted to subsidiaries (Foss et al., 2012). Negative reactions are more likely to occur when intra-organisational boundaries are strong and individuals within subsidiaries do not feel that they belong to the group, but the boundaries are lowered when a shared understanding and mission exist (Decreton et al., 2019). The question of how to effectively manage a network MNC’s operations thus emerges as an intriguing one.

In family firms, previous studies have discovered both factors that facilitate international operations, such as strong social capital, stewardship behaviour and patient capital, and factors that hinder them, such as free riding and shirking (Fernández & Nieto, 2006; Kontinen & Ojala, 2010). Having external parties as owners and on the board of directors can serve as a catalyst for the internationalisation of a family firm (Arregle, Naldi, Nordqvist, & Hitt, 2012) because international experience and the professionalisation of management are helpful in overcoming possible family hesitance about engaging in operations involving more risk (Boellis, Mariotti, Minichilli, & Piscitello, 2016). Still, there is much heterogeneity among family firms: although they have similarities in governance, each firm is unique and demonstrates different strategic behaviour (Kontinen & Ojala, 2012; Melin & Nordqvist, 2007; Sciascia, Mazzola, Astrachan, & Pieper, 2012).

In addition to the composition of governance and ‘heterogeneity bias’, the role of values in internationalisation has been highlighted (Verbeke, Yuan, & Kano, 2020). Family firms are often noted for being traditional, as being more committed to home market-based ways of doing business, keeping control and making mostly incremental changes (Kontinen & Ojala, 2012). The tendency towards risk-aversion is connected to the values underlying the decision-making processes of family-controlled firms. For instance, Koiranen (2002) concluded in his study of Finnish family firms that they valued more desirable modes of conduct than desirable end states, such as good economic return. The personal values of the families are also typically reflected in the values of the firm and its decision-making (Arregle et al., 2017; Zellweger, Kellermanns, Chrisman, & Chua, 2012) and often support a more long-term view (Aronoff & Ward, 2000). Verbeke et al. (2020) noted that values act as guiding principles in how a family firm makes sense of its environment and related resource allocation and strategic decision-making, including internationalisation decisions. In the next section, we elaborate on the influence of family values at the subsidiary practice level with attention to the concept of management model.

Values-Based Management Model of a Family MNC: A Practice Approach

The competing demand to either integrate globally or adapt locally (Marquis & Battilana, 2009) is one of the multifaceted strategic requirements faced by the management of MNCs. The way different firms decide to manage the competing demands depends on the way in which they prioritise different courses of action, and therefore, what they deem desirable. The research on family values and their role in internationalisation has focused on these underlying conceptions and ideas of what is desirable in terms of means or end states of action (e.g., Connor & Becker, 1975, p. 551; Guth & Tagiuri, 1965, p. 125). Koiranen (2002, p. 177) defines family business values as those ‘explicit or implicit conceptions of the desirable in both family and business life’ and continues that such desired end states as shared beliefs underlie the attitudinal and behavioural processes of family members and those involved in business. He emphasises the importance of defining and sharing family business values to form a common ground for the operations.

The values, whether explicitly expressed and shared or not, define the way the firm arranges its management. Birkinshaw and Ansari (2015) coined the term ‘management model’ to describe those underlying principles that hold beliefs about how the different dimensions of management, such as coordinating activities, making decision, defining objectives and motivating employees, should work. To highlight the differences in beliefs, they formulated archetypes of a ‘traditional principle’ and ‘alternative principle’, describing a dichotomy between a more hierarchical, planning-oriented approach and a more modern bottom-up, collective approach to management. In reality, these are not either-or situations, but represent the competing demands faced by an MNC. While a growing MNC typically realises that a more structured approach is needed, it also recognises the need to allow subsidiaries space to develop in terms of the needs of the local environment (see, Regnér, 2003).

To examine the values-based management model of the MNC in question and to better understand the enactment of values in the everyday actions of the individuals managing different units, we adopt a practice approach. Here, we understand values to occur within the field of practices, where practices refer to ‘embodied, materially mediated arrays of human activity centrally organized around shared practical understanding’ (Schatzki, 2002, p. 11). We draw on Schatzki’s conceptualisation of practice in which action consists of three elements: understanding how to do things; explicit rules of what can be said or done; and a teleo-affective structure, which refers to both those aspects that relate to the intended end states of the action and the related emotions, moods and mental states that are acceptable for the participants (the ought-to-do). In order to understand how values are enacted through the different practices of both the subsidiaries and the headquarters, we focus on how such ‘ought-to-do’ practices are manifested in actions: how the desired ends (explicitly expressed as ‘values’ by the HQ) are reflected in the actions and what forms they take in each context.

In our study, we model the way a family MNC aims to reconcile the competing demands in its organising and form its management model as the ‘modus operandi’. This involves looking at how the logic of a firm’s operations are vocalised via family values and how family values are enacted in the subsidiary management models, in which the values take form as certain stable tendencies in the operations of the different units (see Fig. 6.1).

Fig. 6.1
A diagram of the correlation between subsidiary management and H Q coordination and their effects on the outcome of practice based management models in M N Cs.

The emergence of practice-based management models in MNCs. (Source: Authors)

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Research Methodology

Research Strategy

We adopt an instrumental case study strategy with interest in an in-depth understanding of this particular case as such (Creswell, 2012; Silverman, 2005). Complicated cross-cultural settings can be approached well through the case study method (Marschan-Piekkari & Welch, 2004, pp. 7–8), as case studies provide a unique means for developing theory by utilising the in-depth insights acquired about the phenomenon and its context (Dubois & Gadde, 2002). Qualitative research is well suited to cross-cultural settings because it creates an understanding of the meanings and beliefs behind actions (Marschan-Piekkari & Welch, 2004, pp. 7–8) and case study allows a description of the productive dynamics in real-life events (Piekkari, Welch, & Paavilainen, 2009). We rely on interpretive sensemaking, where the case study consists of detailed, contextual descriptions and is used to understand the subjective experiences of various actors (Welch, Piekkari, Plakoyiannaki, & Paavilainen-Mäntymäki, 2011).

The MNC under study is a family MNC that publicly and frequently emphasises the importance of family values in its business operations and has provided us access to three of its subsidiaries in different parts of the world. We selected the case purposively and based on theoretical sampling (Silverman, 2005). We saw the firm as well-illustrating the features of our research interest (family ownership, long history, global operations, values-led), and thus it allows us opportunity to develop the conceptualframework further through an in-depth examination of this particular case. The excellence of the case firm has also been recognised through several awards in relation to its internationalisation and growth and its profile as a family firm, a technology firm and a medium-sized firm as well as in terms of entrepreneurship at both individual and company levels.

Examination of this firm allows us to uncover the ways in which the historically developed values of a family MNC are reflected in the management models of its subsidiaries. Through utilising theoretical lenses in the process of casing (Ragin, 1992; see also Stake, 2005), we defined the management model as the case. Our study uses an embedded single-case design (Halinen & Törnroos, 2005) because we explore both the MNC-level values and management principles and their manifestations in the management models of the three subsidiaries. The network MNC viewpoint also leads us to pay attention separately to the headquarters and the subsidiaries and see the multiple management models.

Data Collection and Analysis

Data collection started with the acquisition of publicly available data on the firm. It includes material such as annual reports, histories and press releases as well as news on the firm. We also followed its communications on various internet platforms. This was done to understand the overall characteristics of the firm, its industry and its ways of doing business. To understand the micro level in terms of the values, management principles and the practice of the subsidiaries, we conducted two rounds of interviews.

The first round of interviews began with us meeting the chairman of the board, who is also the son of the founder of the firm. We received an in-depth presentation on the story of the firm that depicted the decades of its development. In selecting the interviewees, we employed a chain sampling strategy (Fletcher & Plakoyiannaki, 2011). The second interview was with the CEO of the firm whom the chairman suggested to be an important interviewee without family background but many years leading the firm. The chairman and the CEO suggested that we concentrate on three subsidiaries based on their different features and operational environments. We then continued by participating in an annual meeting of the subsidiaries, in which the chairman of the board and the managing directors of the three subsidiaries were interviewed. In the interviews, the managing directors were asked to tell about their own experiences with the subsidiary and describe that way its story.

We analysed this data for the purposes of understanding the managing of the MNC and characterising the subsidiaries. After the interviews, the stories of the subsidiaries were written down (see Ghauri, 2004, pp. 117–118). Summaries of the interviews were also reviewed by the interviewees to ensure confirmability of the research (Flint, Woodruff, & Gardial, 2002; Lincoln & Guba, 1985, p. 300), wherein the participants themselves interpreted the phenomenon, as opposed to researchers. This analysis was the starting point for the second round of interviews two years after the first round. We first met with the chairman of the board and the CEO of the firm to discuss further the operations of the three subsidiaries and their relationships with headquarters. We then continued with interviews of the three managing directors of the subsidiaries both to get their reflections on our earlier interpretations and to discuss the latest developments in the subsidiaries. The interviews (see Table 6.1) were otherwise organised in the facilities of the MNC, but the last three interviews with the managing directors took place via Skype video. All the interviews were recorded and transcribed by a professional.

Table 6.1 Interview data of the case study
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As mentioned above, analysis of the data took place in turns with respect to data collection, as is typical in research involving rich, longitudinal, qualitative data (Dubois & Gadde, 2002; Zalan & Lewis, 2004). The first results were captured with a focus on the subsidiary’s positioning and the tensions in the subsidiary’s interactive spheres. We then continued with attention to the internal operations of the MNC, emphasising the values and managerial principles seen in the management models. The interview data was analysed via a content analytical procedure (Denzin & Lincoln, 2000; Ghauri, 2004). As is typical with embedded case studies, we, first, analysed the headquarters and the subsidiaries separately, with attention given to vocalisations on the values as well as practices in the unit in question. The firm’s headquarters has strong guiding values, which were used as a starting point for the data analysis. We then utilised the value concept discussed in the theory section, where values are seen as socially shared views and an inherent part of practices (see Schatzki, 2002). We then proceeded to compare the units with each other, with focus on the ways they act in relationships and compared the values espoused by the firm’s headquarters with the subsidiaries’ actions. Finally, we depicted the practice-based management models in the values-led family MNC.

Management Models in a Family MNC in the Forest Machine Industry

The MNC under study has been operating for several decades and is currently one of the leading firms in the forest machine industry. Despite being a listed firm, it is still mainly owned by the founding family, now represented by the sons of the founder entrepreneur. The firm operates in approximately 40 countries and exports almost 80% of its products. The early years were rocky, and the firm remained a domestic firm without sales abroad for almost two decades. To intensify internationalisation, the firm was owned by a larger firm for five years, but the entrepreneur acquired full ownership back at the beginning of the 1990s. The company grew at a rather steady pace until 2008, when the financial crisis almost entirely stopped orders. The firm invested heavily in product development and service model renewal and achieved high growth throughout the 2010s; nowadays, the firm is a very profitable company. It has been selected as the best family business, the best international company and the most reputable company in its home country. It continues to be a family firm led by inherited values.

We have never been a family-Sunday-lunch type of business firm, but from the [founder] came very clear directions, and so we have operated.

Historically Developing Values-Base of the Family Firm’s Operations

The thinking behind the company’s way of working has its roots at the beginning of the twentieth century, in farming and forestry. The founding entrepreneur’s family were farmers, very used to hard work. When the husband was away at war, his wife took care of the farm and the family. In addition to a farming background, the founder of the company had been working in timber forests from a young age. The work was heavy, done by hand and horsepower, and the value of one tree trunk was optimised at the site. The effort taken to produce good-quality timber paid off: if forestry representatives had measured the results and found the quality of the timber unsuitable, the reward would have then been lower. Even today, the essence of the MNC’s business is conveyed through a picture of a man, a saw and a horse. This is the basis of the first stated family value, ‘appreciation of hard work’, which goes together with an appreciation of entrepreneurship and an entrepreneurial spirit. The son of the founder described him as a person with a strong belief in the future, a willingness to try and an unwillingness to give up.

However badly things were today, tomorrow can be a better day. Looking in the rear-view mirror has never been part of it. […] “Let’s try!” was [the founder’s] thought.

This value translates into a management principle involving respect for and an understanding of the sense of entrepreneurship. High-quality products and confidential customer relationships are essential; any problems with the machines mean that the forest machine entrepreneurs lose money and may even put at risk the whole business of a small customer owning a single machine. The entrepreneurial spirit is also about innovation. The initial idea of the founder was to make the best forest machine in the world, even though he did not have a high level of education, and that is still the aim of the firm.

The firm also wants to be known for keeping its promises. ‘Honesty’ is a value inherited from the earlier generations, and trustworthiness is also part of the management principle. The people in this firm are expected to be honest in all their daily interactions and actions. Despite being nowadays a middle-sized, globally operating MNC, there is hope that the decision-making will continue to rely on this value and the related ways of working.

Grandma said that you have to be honest. Because without honesty, there is no trust, the same thing in personal relationships and business relationships.

The firm was established in a small village in the rural part of the country, in a location that many would see as disadvantageous in terms of distance and availability of resources. For the entrepreneur, the location meant the possibility to rely on communality that forms one of its management principles. Although some people always question your chances for success, many others offered assistance when it was needed. Just as the hard-working children of farmers are used to taking care of the younger siblings, the village provided funding, loans and a reliable workforce for the firm in its early stages. This is the core of the value ‘looking after each other’.

In a big family, responsibility was taken when you took care of the siblings. In normal work, you should be able to look beyond your tasks, asking if a workmate needs help: “How is it with your tasks today? I’m finished with mine”.

This value translates into the concept of the extended family of the firm. It means that the firm invests in its employees. The employees are trained and provided with possibilities for learning new skills and for career progress, and their overall working and life conditions are supported with appropriate means. Simultaneously, the people in the firm are given responsibility and space for development.

The space for development by the individuals and the independence of the subsidiaries could be seen in contrast to the founder’s idea of family firm management with one face, which could mean centralised decision-making and top management power. However, we can see this ‘faced’ management principle turn towards the value of ‘humbleness’. Hierarchy is intentionally kept to a minimum within the firm; the bosses and the staff sit at the same tables for coffee and lunch, and no one wears a suit or tie to look more important than the others. Humbleness is inherent internally in the idea of the availability of the top management.

As you see, nobody wears a tie; I cannot even remember the last time that I would have worn a tie in this company’s business. One just doesn’t have to; it’s not part of this, this house. […] If there are issues in a supervisor-supervisee relationship, I believe the people will come to tell if it does not work.

In its customer relationships, the sense of humbleness translates into the availability of the owners of the firm for customer service and their participation in any more or less important smaller and larger customer events. They maintain a grassroots-level touch and emphasise the importance of being at the same level with the customers. As the majority of customers are individual foresters and small businesses, the company wishes to see itself similarly: as a family business without additional hierarchies or bureaucracy. At the same time, the company is a listed company with distributed ownership, but it maintains personified ownership. The family owns the majority of the firm and the other top management is present and visible in much of the daily operations and activities.

And then one [principle] concerns the ownership: there can be only one master in the house, the owner has a face.

The other side of the principle that the top management be present and visible is the general approachability of the firm and its people. With respect to approachability, the firm relies especially on humour. It cherishes a joy of work and the fact that joking around is an essential part of serious business meetings, too. This translates into the value of ‘sincerity’. It also comes with common sense and respect for others as part of the management principle, and it takes form in the unique and relaxed interaction and communication practices of the firm both internally and in relation to various stakeholders. People should not think too highly of themselves, no matter who they are, and they should treat others as their equal and with respect.

But as a culture and a company, this is easy to approach … this gang. In the directors’ meetings, there is always teasing and joking involved; it is part of the job, this kind of brisk humour.

Over the last ten years, the shift from the founder’s era to a new era of expanded operations has been visible. Just as the firm was built on the founder’s work and innovation, with him acting as a charismatic leader who was seen as the highest authority in decision-making, the company has of late faced a phase of expansion after the founder’s gradual exit from the stage. The company has been searching for a new management and leadership style, and the question of a proper ‘management model’ has now in new ways arisen. The rational elements of the management model are described as the combination of searching for the new, maintaining strategic direction, managing stakeholder relationships and maintaining a sense of purpose and relatedness with people.

A few years back, the company gave up its vice president-based organisational structure, where the headquarters governed the market areas. Subsidiary managers and regional directors became the persons responsible for the local subsidiaries, having direct contact with local customers. Thus, the aim has been to decentralise responsibility and decision-making, but at the same time management is considering ways to measure the effectiveness of the local management models, which have merged. What the headquarters expects from the subsidiaries is that they function as independent units, reflecting the same core values in their operations but ‘thinking for themselves’ and making decisions on the spot. The company aims at maintaining contact with the subsidiaries through regular meetings and board activities, but it does not wish to meddle with the everyday operations. Much responsibility is then placed on the shoulders of the subsidiary management. However, there are many questions about how the subsidiaries in various parts of the world represent the MNC. The company is torn between its independent subsidiary approach and the need to build structures and processes to guide the development of the entire MNC.

how well does the guy in China understand this philosophy of ours, our employee, or in the States or somewhere else, that is something to work upon.

In the following, we will look at the three subsidiaries in terms of their management models as reflections of the historically developed values and management principles of the firm.

Localised Management Models from the Values of Headquarters to the Subsidiaries

On a general level, the subsidiary managers share many common features in their management style based on the core values vocalised by the headquarters. What they have in common is the desire to be close to customers and be easily approachable. Being at the level of the customer is perceived as a competitive advantage and one that differentiates the firm from its competitors. Despite similarities of the subsidiaries, differences also exist. The history of the subsidiary, as well as the type of the market, has a strong effect on the practice of each subsidiary, and each managing director leads the way with his/her own style. Table 6.2 collects the main features of the three subsidiaries in terms of the local management and local markets.

Table 6.2 Comparison of subsidiary management and market features
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We defined above five primary values in the operations of the MNC. The explicitly addressed values and the management principles based on them are the means by which the firm’s headquarters achieves integration when dealing with its subsidiaries. The principles and the underlying values form the logic, or ‘modus operandi’, of the firm’s activities, which the subsidiaries also follow in their local operations. However, differences exist between the subsidiaries in the way the values and the management principles are manifested at the level of everyday practices. These differences are defined by the local market type and the relationships in the local networks as well as by the leadership style. All the subsidiaries reflect the values of the company in their activities, but for each subsidiary one of the values especially seems to build the dominating management principle. When the other values and management principles became intertwined with this core value, each subsidiary could be described by the alternative management model that it had adopted.

Sweden is a developed market, and it has long been among the first to adopt new practices and trends in the forestry industry. Also initiatives for innovations often come from the demands of the Swedish market. The launch of a new model that is clearly at the forefront of development can improve the image of the entire company and increase the sales of all machine types in the market. The Swedish subsidiary handles its sales without utilising dealers, but it does use an external maintenance network for service-related matters. The smaller customers are important along with the larger forest industry companies or sawmills, who give projects to the company’s customers, meaning that including the customer’s customers in the sales processes is essential. Hierarchy in the Swedish organisation is kept to a minimum and employees are encouraged to act together and share information regarding their activities and efforts. Still, the struggle to achieve a larger market share and changes in leadership have led to feelings of uncertainty.

At first when I came, the situation was really turbulent. Everybody asked, am I the last guy to come in and turn off the lights?—I needed to go meet the customers and every time listen to how our operations have been totally non-Swedish—and then assure [them] that we are not leaving, and we are continuing but in a different way.

An ‘appreciation of hard work’ is evident in all three of the subsidiaries in terms of respect for entrepreneurship and the entrepreneurial spirit and an appreciation for experimentation. However, in Sweden the pressure to be at the very forefront in innovation, in particular with respect to societal responsibility, has made it appear as a ‘demanding family’ that always asks somewhat more than one can readily provide.

Most probably because of the forerunner status of the market, there have been some issues with respect to the ‘humbleness’ value when some salespeople have hesitated to adopt certain practices and with ‘honesty’ when the customers have been promised some additional service. These issues strengthen the demanding family characterisation, as the managing director has needed to pay continuous attention to the agreed upon sales practices as well as carefully consider the sufficiency of the service network. In the spirit of the ‘looking after each other’ value, the demands placed on the employees have been supported by investing in human resource management and the personnel. The ‘sincerity’ has been realised in the form of relaxed, humorous communications with the customers.

In the US market, the company is the market leader in northern parts, but the local forestry traditions make the southern US a difficult market to break into; the mindset and machinery are challenging to change. The customers are mainly small firms, most preferring large engines. A typical customer is a family business with two machines: a harvester and a forwarder. Closeness to customers and active customer contacts are central, and the customers are seen as part of the family of the firm. Also, decisions on the location of offices have been made based on customer preferences. The managing director of the American subsidiary has a central role in the organisation and has a clear vision of how the subsidiary should act, but otherwise the organisational structure is low, and the company is described more like a family, where the wellbeing of employees, and customers is central.

I try to make at least ten calls per day to different people. Just to say hi. Always, when I am in the car, there is nothing to do except make calls—For example, one person wanted a calendar from Finland—so I gave him a calendar.—We do these things differently, and customers are very close. We don’t have any layers … between customers and us, but anybody can walk in from that door and come to talk anytime.

The US subsidiary is unique in its down-to-earth, customer-centric focus. We termed the subsidiary the ‘conversational family’, by which we are referring to the importance of being available all the time and easily approachable for extended family, customers and partners in the local market. Asking ‘how are you?’ and showing appreciation for the little things are stressed. The doors are always open for the customers to stop by and chat. These practices carry the value of ‘humbleness’, working together with the value of ‘sincerity’, which is characterised in their relaxed, self-made marketing communications. They have sponsorships with, for example, an off-road team, snowboarders and boxers, which have come through the customers’ or personnel’s affiliations. Their customer events are designed for having fun, with managers, owners, employees and customers all relaxing together. They have not used professional advertising agencies, but all communication materials with a similar attitude have been done by themselves. The ‘appreciation of hard work’ rests on an understanding of the family business model that the customers represent. The conversational family is also ‘looking after each other’ when adopting social security practices in relation to the employees.

The Russian subsidiary has three offices, but the main site is in St. Petersburg. Machines and spare parts are imported to Russia through St. Petersburg and from there delivered further to dealers and customers. The Russian market is divided roughly in half between the two machine-based forestry methods. Customers are a heterogeneous group varying from small contractors to multinational companies. The Russian market is not yet technologically advanced, and it is vital that there are no technical problems with the product when sales commence. Hierarchies have traditionally been emphasised in Russia, and the managing director is commonly in charge of everything. The subsidiary has, however, succeeded in sharing the responsibilities among five to six key individuals and delegating the tasks. Also, employee training and education and communicating the core elements of the organisational culture are crucial. The entrepreneurial spirit is emphasised due to the complicated institutional environment. The Russian subsidiary has eight dealers, through whom the customers often approach the firm, and a few partners focusing on service.

In Russia, the distances are long and logistics less developed than in other parts of Europe; it maybe stresses the need for extra effort so that we can serve the customers, that they have the spare parts and maintenance and workers.—It starts with people’s attitudes and expertise—It requires work to get them [employees] to do things in our way and to know our machines and other [practices]—one important job is the training and we have invested a lot in that.

In Russia, a ‘supportive family’ has emerged that puts much effort into training and providing other types of assistance to both the employees and the dealers. The ‘appreciation of hard work’ has a solid basis in the large entrepreneurial population, in which there can be found motivated people seeking to develop better practices. The subsidiary management stresses attitude and expertise as well as commitment to cooperation with the MNC in the selection of both employees and dealers. This allows for a type of managing based on ‘looking after each other’ via an extended family principle by first training and then giving responsibility and space for development to hard-working people. The characterisation is strengthened by the ways in which the value of ‘humbleness’ takes form in the participation of the owners and top management of the MNC in customer and dealer meetings and the invitations for them to visit the factory in the home country. These practices are much appreciated. ‘Honesty’ is important in terms of the trustworthiness of the machines and their maintenance because the customer often operates them in remote locations under tough climatic conditions.

The different management models are presented in Table 6.3. Each of the core values has been translated into guiding local management principles in the subsidiaries’ operations but we see there a leading management principle that forms the common thread in the story of the subsidiary. For Sweden, it is ‘constant development’, for the US ‘being available’ and for Russia ‘investing in people’ that forms the teleo-affective structure related with the intended end states and the expected and acceptable action of the participants (the ought-to-do).

Table 6.3 Comparison of the subsidiary management models
Full size table

The principles balance the basic contradiction between traditional and alternative principles, or control and emergence (Birkinshaw & Ansari, 2015), which lies at the core of management activities not only in the headquarter model, but also in the models of the subsidiaries. Presently, the MNC leans towards the ‘alternative’ principle with its bottom-up approach, as it aims to live physically and figuratively close to its customers, partners, suppliers and employees. By deferring to expertise, by leaving decision-making to those people that best know the situation at hand, the MNC also aims, on the one hand, to provide a quick response time, and on the other hand, to learn from those on the front line. The values of the family business provide a solid foundation and a common platform, a nexus, for practices in a variety of international markets that require local sensitivity.

Discussion

The primary contribution of the present study has to do with our use of a micro-level approach to analyse the design choices in the management of family MNCs. We have, first, illustrated the ways that values can become the backbone for dealing with the paradox of a simultaneous need for controlled and independent decision-making and processes in globally operating MNCs (Marquis & Battilana, 2009; Prahalad & Doz, 1987). We searched for the drivers of the contradictory pressures on organising at the subsidiary level of operations and ended up by presenting the practices at various units and how they relate to local circumstances. We concluded that the management models are inevitably numerous within a globally operating, family MNC, but they can come together in an informal nexus of values, even when taking into account different manifestations of them within the different units.

Our micro-level practice approach makes a contribution also to the research on values as determinants of family firm internationalisation (e.g., Verbeke et al., 2020). In general, the family values we noted, as vocalised by the MNC headquarters and enacted by the subsidiaries, included honesty, credibility, quality and working hard, all of which Koiranen (2002) and others have found to form the core of family business values. However, our practice approach highlights the need for the management to focus more on activities and how such activities may reflect the same shared values and understanding in very different ways—ways that fit the local context and people involved. This relates to the complexity of transferring the ‘best practice’ between units, as the practices are always embedded in local context, and hence, the values need to take different manifestations. The analysis also suggests that each subsidiary might build its practice primarily around one core value and related leading management principle and then circumscribe the other principle around this core. This can, on its part, explain the different spirit and atmosphere that is felt in different units of a single MNC.

Third, we have elaborated on the concept of management model and captured it in more dynamic terms than first presented by Birkinshaw and Ansari (2015). The management model of a family MNC can be defined, on the one hand, as a collection of management principles that guide operations and produce the consistency that can be seen behind managerial decisions and actions. On the other hand, adopting a practice lens in our analysis of company operations helped us reveal the ‘modus operandi’ of the firm’s activities: the logic behind organising. Instead of focusing on those issues that ‘can more readily be altered by those in positions of seniority’ and are ‘more tangible and readily manipulated’ (Birkinshaw & Ansari, 2015, p. 91), we featured the MNC management models as the result of both headquarters and subsidiary level managerial practice. The practice approach allowed us to understand the dynamics inherent in the model and focus on the dimensions that, even when not ‘managed’ by a mere decision, are the ones through which the logics come to be and can be influenced through people’s actions. This is especially evident in a family MNC whose activities are driven by family values.

As a result, we also demonstrated how the seemingly contradictory ‘traditional’ and ‘alternative’ principles underlying the management model are not so much an either-or choice but rather a question of how much and when the firm decides that a more structured or bureaucratic approach is needed to coordinate activities in different parts of the entire organisation. The design of the management model also depends on the viewpoint taken: while the headquarters of a globally operating MNC is in a continuous process of finding its own way of organising that negotiates between standardisation versus local adaptation (Bartlett & Ghoshal, 1989; Nohria & Ghoshal, 1997) and the need to control and allow for independence, a subsidiary’s model perceives the problem as striking a balance between following the guidelines and processes versus maintaining the freedom to appreciate their partners and innovate on the basis of the local needs. Here the management principles developed from the nexus of the shared values are weighted in their power of leading the activity.

The managerial contribution of the study is based on the understanding of the ways these dynamics and contradictions can be utilised for coordinated differentiation when organising a network MNC. The dynamic practice-based approach provides managers with a more realistic picture of the challenges of management by relying not on either-or choices of the planning and strategic management school but building on both-and conflicting demands that need to be balanced. In a family firm, values provide a foundation for leading the international operations, if a sense of familiness can be flexibly applied in different markets. As noted above also the values-based best practice needs to be locally interpreted.