Co-evolved value transfer: Managing subsidiary managers’ reinterpretation of headquarter values

Abstract

Transferring headquarters’ (HQ) organizational values is crucial for multinational corporations (MNCs) to align subsidiary managers’ behavior with the global value system. However, subsidiary managers tend to reinterpret HQ values to advance local interests and agendas, potentially causing local behavior to deviate from global expectations. Drawing on a multiple-case study of value transfer activities in the Chinese subsidiaries of seven MNCs, we found that the impact of value reinterpretation on value transfer outcomes—whether constructive or destructive—depends on whether subsidiary managers, acting as either value senders or recipients, engage with one another to foster a co-evolved process of anchoring, calibrating, and accommodating value reinterpretation. This study reveals how intra-subsidiary interactions among subsidiary managers can transform value reinterpretation into a source of knowledge creation, enabling HQ values to continuously guide local behavior while adapting to local realities. Our findings also offer insights into how MNCs can reconcile competing demands in the internationalization process.