Local linkages and their effects on headquarters' use of process controls

Management control in multinational companies: a systematic literature review

“…Increasing geographical dispersion prompts the integration of non-financial controls (Kihn 2008;Mongiello and Harris 2006) and challenges management information systems not least due to the different locations of experts and operations across different time zones (Hyvönen et al 2008;Sheu et al 2004). In contrast to Gencturk and Aulakh's (1995) finding, that process control appears to be less relevant with increasing internationalization, Yu et al (2006) suggest that international experience has a positive effect on process control. Kihn (2010) supports this by claiming that managers in highly internationalized firms put strong focus on all controls including process control.…”

“…while Gencturk and Aulakh (1995) studied activities of US MNCs in the early 1990s, Kihn (2010) and Yu et al (2006) published their studies more than 10 years later. Moreover, Yu et al (2006) included emerging countries, where establishing rules and procedures provides the basis for MC.…”

“…Moreover, Yu et al (2006) included emerging countries, where establishing rules and procedures provides the basis for MC. This is supported by the argument that, at an early internationalization stage, detailed rules and procedures serve to establish control systems from the home country at subsidiaries (Neves and Bugalho 2008).…”

“…As the experience of subsidiaries grows, the autonomy of the local management increases (Kranias 2000;Moilanen 2007;Yu et al 2006) while process controls decrease (Yu et al 2006) and means of control adapt to host country requirements (Dossi and Patelli 2008;Kranias 2000). Social control mechanisms like trainings or networks support the introduction of process and output control in early stages by creating trust and building legitimacy (Brenner and Ambos 2013;Moilanen 2007).…”

“…Insights on the effects of a subsidiary's age have been reported since the early 2000s with an emphasis on extent and combination of control mechanisms. As the establishment of a subsidiary's control structures and local networks takes time, control mechanisms are adjusted to the development stage with intense monitoring at the beginning and looser process and output control to allow mature subsidiaries higher autonomy and (2000) localization (e.g., Brenner and Ambos 2013;Yu et al 2006). Insights from qualitative studies are largely supported by quantitative surveys for emerging as well as industrialized countries.…”