Sales to centre stage! Determinants of the division in strategic sales decisions within the MNE

Abstract

Extant international business (IB) literature on Headquarter (HQ)-subsidiary relationships has established that where decision-making occurs, it influences a firm’s performance. Existing studies propose that the degree of autonomy in decision-making at subsidiary level is not the same for all value chain activities, paying more attention to upstream activities. This paper contributes by exploring decision-making autonomy in downstream strategic sales activities. Sales has rarely been centre stage in IB investigations and we therefore lack thorough understanding of its role and importance within the MNE decision-making processes. Conducting a mixed methods exploratory study in the fast-moving consumer goods sector in Germany, we test for antecedents and outcomes of subsidiaries’ strategic sales decision-making autonomy. Results confirm external and internal embeddedness as antecedents, and the dominant role played by the local context, but provide insights into potential risks of internal embeddedness. Results challenge existing theory inasmuch as subsidiary importance is not a significant driver. A critical implication of this finding is that, compared to upstream activities, the HQ may not have the option of mandating a subsidiary to transfer sales strategy skills and knowledge across the network. Our results show that, in an era of globalisation of sales, and internationalisation of retailers, HQ managers must pay heed to directly interacting with subsidiaries and to sharing strategic sales decision-making across the network to consolidate the MNE’s global sales strategy.