Control in Subsidiary Networks in Asia: Toward an Extension of the Centralisation-Formalisation-Socialisation (CFS) Model

Abstract

Prior research establishes that international control by multinational corporations is based on three dimensions: centralisation, formalisation and socialisation. New control mechanisms appeared in the last decade, such as enterprise resource planning, short-term assignments and regional centres. Do these new mechanisms fit the three control dimensions? How do MNCs articulate their control mechanisms, including new ones? Using interviews with 77 managers of 47 French MNCs in 11 Asian countries, this study presents an exploratory factor analysis and clustering. The findings show that French MNCs control their Asian subsidiaries through four dimensions: centralisation of decision making, formalisation of subsidiaries, socialisation and expatriation.

The bridging role of regional headquarters. Multinational companies in the Asia-Pacific region

“…In this sense, they extend the centralization-formalization-socialization framework. Amann et al (2017) find that, to retain control over their Asian subsidiaries, MNCs articulate four main mechanisms:…”

“…In other words, how is the classic centralization-formalization-socialization model of control affected by the creation of RHQs? To answer this research question, we propose a set of hypotheses that reflect the findings of the recent literature and the results of qualitative interviews that we Bridging role of regional headquarters held with expatriated managers in the Asia-Pacific region (Amann et al, 2014(Amann et al, , 2017. We test these hypotheses with a quantitative survey completed by representatives of 86 French MNCs in the Asia-Pacific area between 2015 and 2019.…”

“…Various mechanisms contribute to each dimension of the framework. For instance, written rules, procedures, job descriptions and reporting contribute to the formalization dimension; staff mobility, training and informal personal relations contribute to the socialization dimension (Amann et al, 2017;Ambos and Schlegelmich, 2010;Nobel and Birkinshaw, 1998;Ghoshal and Nohria, 1989).…”