Fiduciary Duty to Whom, Parent or Grandparent? Aching Priorities within Stewardship Theory

Abstract: With increased globalization and competition, increased complexity in organizational structures has followed. How to best manage the branches of such structures has been the focal point in much of the previous research ­- why different branches behave in certain ways has however been less researched. The purpose of this study is, therefore, to better understand and explain what the driving forces are behind a relationship between a parent company and a subsidiary in a multinational company. In particular, what kind of behavior can be expected from a subsidiary. By conducting a single case study on a Swedish multinational company, with the theoretical frameworks of agency theory and its sub-branch stewardship theory, we aim to fulfill this study's purpose. We conclude that although a steward's (subsidiary's) behavior is first aligned with what is expected by the principal (parent company), this might change and even deteriorate over time. Not because the principal has changed its attitude or behavior towards the steward, but due to confirmation of biases. The biases stem from continuous, direct or indirect, interactions with a higher principal in the principal hierarchy. This may cause a goal convergent steward to become priority divergent, resulting in agency behaviors.