Perception Gap Emergence and Evolution During Cross-border Integrations: Longitudinal Evidence from an Italian MNC

This paper investigates the emergence and evolution of a HQ-subsidiary perception gap concerning the MNC’s organizational model and the related strategy. The single case research design with embedded multiple units of analysis draws on longitudinal data referring to a process of cross-border, post-acquisition integration. The findings suggest that organizational and institutional distance are the relevant dimensions in explaining the emergence of a perception gap between the HQ and the acquired subsidiary. The influence of the two distance dimensions on the perception gap is, however, activated or neutralized by the organization status and the country status of the HQ and the acquired subsidiary. The HQ-subsidiary perception gap, once emerged, is subject to an evolutionary process involving three different loops of HQ-subsidiary interactions and quality of the HQ-subsidiary relationship – stabilizing, polarizing and neutralizing. The paper contributes to the current debate on HQ-subsidiary perception gap, as well as to institutional perspectives on the HQ-subsidiary relationship.