IMD International

The perils of attention from headquarters

Operations in growing markets such as China often draw substantial attention from corporate headquarters. Unfortunately, that attention does not always add value — and can even impede performance.

January 27, 2015

IMD Professor Cyril Bouquet and IMD research fellows Jean-Louis Barsoux and Orly Levy have published a new article on subsidiaries in the MIT Sloan Management Review.

Their article, titled "The Perils of Attention From Headquarters", questions whether headquarters focusing substantial attention on subsidiaries adds value or impedes performance.

Here is a brief extract:

In the far-flung subsidiaries of global corporations, getting attention from headquarters can often be an asset. Country managers in neglected outposts often envy their counterparts in "hot markets," who seem to be able to attract all the high-level support, interest and resources they need. However, such attention from headquarters can have a downside as well, sometimes triggering a dynamic that hampers performance.

The pervasiveness of these negative forces became apparent during an international workshop we ran for managers of foreign subsidiaries on how to manage the attention of headquarters staff. Although we expected to hear dissatisfaction from managers of neglected subsidiaries, we were surprised at the level of frustration voiced by managers of subsidiaries on which plenty of attention had been lavished. This discovery suggested that, even with the best of intentions, headquarters' "support" can easily mutate into "hyper-attention" that destroys value. To explore this phenomenon, we conducted 55 interviews with subsidiary managers based in China, one of the world's "hottest" markets in recent years.

Rather than study all types of interactions between headquarters and subsidiary executives (including video, telephone, email, and headquarters' requests for written information and reports), we chose to focus on visits from the head office. For subsidiary executives, such visits consume considerable amounts of time and energy, and from a research perspective, they offer a rich vein of information (even though the interviewees agreed to speak only on condition of anonymity).

The article appeared in the winter 2015 MIT Sloan Management Review, and you can read it here.

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