Control mechanisms employed between headquarters and subsidiaries in Multinational Enterprises (MNEs)

Alharbi, Jaithen; Gelaidan, Hamid Mahmood; Al‐Swidi, Abdullah Kaid; Saeed, Abubakr

doi:10.1108/ribs-03-2016-0018

Cited by 12 publications

(11 citation statements)

References 64 publications

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“…In this technique, parent expatriates fill the top management positions in host countries (Baliga & Jaeger, 1984). In comparison with a local country head, an expatriate manager can better internalize parent firms' decisions or directly supervise the execution of such decisions (Alharbi, Gelaidan, Al-Swidi, & Saeed, 2016;Muellner, Klopf, & Nell, 2017). Deploying expatriates can also be viewed as a type of cultural control because it creates a high degree of sharing of values and goals between parent firms and their foreign subsidiaries (Alharbi, Gelaidan, Al-Swidi, & Saeed, 2016).…”

Section: Hypothesis 2: Whether a Foreign Subsidiary Directly Reports To Its Parent Firm Weakens The Positive Relationship Between Parent mentioning

confidence: 99%

“…In comparison with a local country head, an expatriate manager can better internalize parent firms' decisions or directly supervise the execution of such decisions (Alharbi, Gelaidan, Al-Swidi, & Saeed, 2016;Muellner, Klopf, & Nell, 2017). Deploying expatriates can also be viewed as a type of cultural control because it creates a high degree of sharing of values and goals between parent firms and their foreign subsidiaries (Alharbi, Gelaidan, Al-Swidi, & Saeed, 2016). By contrast, allowing a subsidiary to hire a local country head helps subsidiaries increase their autonomy and reduce the level of parent firm control over foreign subsidiaries (Tao, Liu, Gao, & Xia, 2018).…”

Section: Hypothesis 2: Whether a Foreign Subsidiary Directly Reports To Its Parent Firm Weakens The Positive Relationship Between Parent mentioning

confidence: 99%

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Foreign subsidiary CSR as a buffer against parent firm reputation risk

Zhou

Wang

2020

J Int Bus Stud

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This study examines the influence of parent firm reputation risk on the level of corporate social responsibility activities of foreign subsidiaries. We first argue that a strong reputation risk spillover occurs from parent firms to their foreign subsidiaries due to the high visibility of multinationals, the control of parent firms over their subsidiaries, and the liability of foreignness associated with foreign firms in host countries. Then, we argue that subsidiaries may resort to CSR in their host country to reduce the spillover effect. Thus, we hypothesize a positive relationship between parent firm reputation risk and foreign subsidiary CSR activities. Moreover, we explore several contingency factors at both the parent firm and subsidiary levels that affect the extent of spillover and the need for subsidiaries to use CSR as a buffer against parent firm reputation risk. We find that the positive relationship between parent firm reputation risk and foreign subsidiary CSR activities is weaker for foreign subsidiaries that directly report to parent firm, with longer operations in the host country and larger institutional distance between host and home countries. Using a unique sample of subsidiaries of large multinationals in China from 2009 to 2016, we find general support for our arguments.

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Section: Hypothesis 2: Whether a Foreign Subsidiary Directly Reports To Its Parent Firm Weakens The Positive Relationship Between Parent mentioning

confidence: 99%

Section: Hypothesis 2: Whether a Foreign Subsidiary Directly Reports To Its Parent Firm Weakens The Positive Relationship Between Parent mentioning

confidence: 99%

Foreign subsidiary CSR as a buffer against parent firm reputation risk

Zhou

Wang

2020

J Int Bus Stud

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“…A strategy of cost leadership essentially relies on corporate integration and the standardization of products leading to reduced costs (Alharbi et al, 2016;Meyer and Estrin, 2014). On the other hand, corporate differentiation rests on a corporate-wide capability to RIBS 30,1 develop innovations or offer differentiated products in other ways (Hult and Ketchen, 2001).…”

Section: Corporate Competitive Strategymentioning

confidence: 99%

“…Implementation of a cost leadership strategy does not require more than local sales, as it is beneficial for the company to centralize the upstream activities of R&D and production (Prahalad and Doz, 1987). In essence, a corporate strategy that emphasizes standardized products requires the integration of crucial activities such as R&D and production, and the extensive control and centralization of important functions (Alharbi et al, 2016;Meyer and Estrin, 2014). However, efficient differentiation is contingent on the behaviours of local competitors and on a subsidiary experienced enough to be able to adjust products and services accordingly (Meyer and Estrin, 2014;Pehrsson, 2017).…”

Section: Development Of Propositionsmentioning

confidence: 99%

Instantly upgrading a foreign subsidiary’s value-adding scope: impact on growth

Pehrsson

2019

RIBS

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Purpose Drawing on the knowledge-based theory, the purpose of this paper is to extend the current understanding of a company’s upgrading of a foreign subsidiary’s value-adding scope and its impact on growth. Design/methodology/approach This study applies a longitudinal approach and analyses the value-adding scopes of the subsidiaries of two Swedish industrial companies in the USA, resulting in a proposed model. Findings Greater adaptation of the corporate competitive strategy is linked to a greater likelihood of upgrading the subsidiary’s scope to include R&D and production activities. Also, market experience of the subsidiary is positively associated with this likelihood. The greater the coherence between the scope and knowledge originating from the local adaptation of the corporate competitive strategy and the subsidiary’s market experience, the greater the growth of the subsidiary. Research limitations/implications This study contributes to the literature on international business and strategy in several ways. Future studies may turn the propositions into hypotheses for statistical tests. Practical implications An industrial company striving for the growth of a foreign subsidiary must assess subsidiary knowledge pertaining to value-adding. To achieve high growth, the subsidiary’s value-adding scope must be aligned with knowledge stemming from the corporate competitive strategy and market experience. Originality/value This is the first study explicitly explaining the crucial upgrading of a foreign subsidiary’s value-adding scope to include R&D and production. Coherence between an upgraded scope and crucial knowledge explains the subsidiary’s growth.

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“…However, the assumptions of independence, normality, and linear relationships between variables in these traditional statistical methods are often inconsistent with the real-world characteristics of the complex and intertwined relationships among supervision elements, limiting the ability to extract important information. Accordingly, to comprehensively explain real-world situations and explore hidden information, numerous artificial intelligence (AI)-based approaches have been introduced to handle internal control issues, such as performance measurement, (Dossi and Patelli 2008;Fitzgerald and Rowley 2015), credit rating analysis (Yu et al 2015), mutual fund performance (Kong et al 2019;Moradi and Mokhatab Rafiei 2019), and corporate governance (Alharbi et al 2016), without satisfying strict statistical assumptions.…”

Section: Introductionmentioning

confidence: 99%

Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment

Hsu

Chen

et al. 2021

Financ Innov

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In a highly intertwined and connected business environment, globalized layout planning can be an effective way for enterprises to expand their market. Nevertheless, conflicts and contradictions always exist between parent and subsidiary enterprises; if they are in different countries, these conflicts can become especially problematic. Internal control systems for subsidiary supervision and management seem to be particularly important when aiming to align subsidiaries’ decisions with parent enterprises’ strategic intentions, and such systems undoubtedly involve numerous criteria/dimensions. An effective tool is urgently needed to clarify the relevant issues and discern the cause-and-effect relationships among them in these conflicts. Traditional statistical approaches cannot fully explain these situations due to the complexity and invisibility of the criteria/dimensions; thus, the fuzzy rough set theory (FRST), with its superior data exploration ability and impreciseness tolerance, can be considered to adequately address the complexities. Motivated by efficient integrated systems, aggregating multiple dissimilar systems’ outputs and converting them into a consensus result can be useful for realizing outstanding performances. Based on this concept, we insert selected criteria/dimensions via FRST into DEMATEL to identify and analyze the dependency and feedback relations among variables of parent/subsidiary gaps and conflicts. The results present the improvement priorities based on their magnitude of impact, in the following order: organizational control structure, business and financial information system management, major financial management, business strategy management, construction of a management system, and integrated audit management. Managers can consider the potential implications herein when formulating future targeted policies to improve subsidiary supervision and strengthen overall corporate governance.

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Control mechanisms employed between headquarters and subsidiaries in Multinational Enterprises (MNEs)

Cited by 12 publications

References 64 publications

Foreign subsidiary CSR as a buffer against parent firm reputation risk

Foreign subsidiary CSR as a buffer against parent firm reputation risk

Instantly upgrading a foreign subsidiary’s value-adding scope: impact on growth

Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment

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