Corporate Governance of Multinational Companies: Current Problems and Potential Solutions

Multinational companies operate under the dual imperative of global integration and local responsiveness. This tension results in control problems that can be effectively mitigated by corporate governance. The aim of the paper is to discuss these issues and to offer potential solutions in the form of governance mechanisms at the headquarters’ disposal. These include direct control by boards of directors and indirect control by means of incentive systems. The main argument is that the choice between these mechanisms is largely determined by a subsidiary’s level of autonomy and its strategic role within the corporate network.