Pirates of the Subsidiaries : How Subsidiary Managers Retain Subsidiary Mandates Through Unsanctioned Strategic Initiatives

This study examines the factors influencing overseas subsidiary top managers’ (OSTMs) honorable non-compliance with their headquarters’ instructions or subsidiary mandates. Our grounded theory qualitative study is based on twenty-four (24) interviews with OSTMs from various industries in Guyana, an emerging economy. Disadvantageous subsidiary mandates and a subsidiary manager’s relative advantage of sensibilities of locale explained incidences of honorable non-compliance. Having disadvantageous subsidiary mandates resulted in subsidiaries altering sources of value creation, tuning the subsidiary’s employee experience, protecting, and preserving the subsidiary’s symbolic capital, and maintaining and developing relational capital, while subsidiary managers’ relative advantage manifested when they sought to exploit sensibilities of the locale to drive value and exploit the sensibilities of headquarters’ tolerance limits. We present an emergent model of honorable non-compliance. It is imperative that headquarters personnel of multinationals are cognizant of these discoveries to better their chances of business success in an emerging economy. Our findings contribute to the understanding of factors influencing honorable non-compliance with mandates in an emerging economy