Impact of parent-subsidiary conflict on ERP implementation

Abstract

Purpose – In spite of the large body of literature on success factors of enterprise resource planning (ERP) implementation, there is a need to explore its multinational dimension. The purpose of this paper is to explore the impact of the conflict between parent and subsidiary on the process of ERP implementation in a multinational enterprise (MNE). Design/methodology/approach – Using an interpretive case study methodology, this paper analyses the theoretical frameworks of parent-subsidiary conflict and applies them to interpret an in-depth case study and generate a set of managerial prescriptions. Findings – Theoretical analysis and case evidence suggest that managing parent-subsidiary conflict is a critical success factor of ERP implementation in MNEs. Research limitations/implications – This case relates to a diversified multinational group producing a variety of materials through subsidiaries. The data collection includes multiple sources in the company, and strong theoretical development provides a high level of generalizability. The paper shows that managers should consider the impact of conflict from the planning stages of any multinational ERP implementation. Practical implications – A detailed set of practical managerial prescriptions is derived from case and theoretical analysis. These prescriptions provide guidance to multinational managers planning a successful global ERP rollout. Originality/value – Although parent-subsidiary conflict is clearly a major factor in multinational ERP implementations, this topic has never been analysed in detail in the literature. This paper breaks new ground applying grounded theoretical frameworks of parent-subsidiary conflict to an implementation case, and providing managerial guidance for implementation decisions.

An ERP success model based on agency theory and IS success model

“…They investigated enabling factors for top management support and showed that end users believe organizational communication and training have a positive effect on top management support. Gavidia (2016) shows that managing parent–subsidiary conflict is a CSF for ERP implementation.…”

A strategic conflict analysis in IT outsourcing using the graph model for conflict resolution

“…Other studies address the importance of the client and the definition of service level agreements (SLAs) for the minimization of conflicts (Heiskanen et al, 2008;Kaipia and Turkulainen, 2017). In scenarios, enterprise resources planning (ERP) implementation Gavidia (2016) identified that conflict is a critical success factor.…”

Heterogeneity of the steering of foreign subsidiaries in multinational automotive companies

“…The demand for more heterogeneous steering of foreign subsidiaries in MNC arises from the relationship of the subsidiaries with the parents or headquarters (Birkinshaw and Hood, 1998), particularly in complex matrix or network structures with functional departments, business units and geographic areas which pursue their own goals or interests and are in opposition to the subsidiaries' goals (Gavidia, 2016). This demand has reignited the debate about the headquarter-subsidiary relationship, with fundamental concepts such as hierarchy and coordination and a subsidiary's autonomy (e.g., Gammelgaard et al, 2012).…”

“…First of all, contingency theory considers different environmental conditions at headquarters/parent und subsidiaries (e.g., Doz and Prahalad, 1991;Gavidia, 2016), which have been discussed for a long time now as the global-local -'GLOCAL 'dilemma (Laudien and Freiling, 2011). Although today global integration or standardisation is still necessary to pursue the goal of improving process efficiency and reducing redundancies, there is a growing need for local adaptation enabling greater creative freedom, flexibility and market proximity.…”