The Management of Information and Managers in Subsidiaries of Multinational Corporations
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00472.x |
| Author | Patrick T. Gibbons,Herbert P. Schoch,Lai Hong Chung |
| Date | 01 June 2006 |
| Published date | 01 June 2006 |
The Management of Information and
Managers in Subsidiaries of Multinational
Corporations
Lai Hong Chung, Patrick T. Gibbons
*
and Herbert P. Schochw
Nanyang Business School, Nanyang Technological University, S3-B1A-15, Nanyang Avenue, Singapore
639798,
*
Department of Business Administration, University College Dublin, Ireland and wDepartment of
Accounting and Finance, School of Economic and Financial Studies, Macquarie University, New South Wales
2109, Australia
Email: alhchung@ntu.edu.sg [Chung]; pat.gibbons@ucd.ie [Gibbons]; hschoch@efs.mq.edu.au [Schoch]
A key challenge facing multinational corporations (MNCs) is how to encourage the
development of firm specific advantages throughout the network of subsidiaries while
maintaining global coherence. As a result, a critical task for top managers in the MNC
is to structure the relationship between headquarters and subsidiaries. Thus,
headquarters’ control of subsidiary behaviour and performance becomes a central
integrating function in the MNC.
We examine first the relationship between the nationality of the MNC headquarters
and its information management, namely the key performance metrics utilized by the
parent to evaluate subsidiary performance. Second, we investigate the relationship
between the MNC nationality and its management of managers, specifically, the
transfer of parent company nationals and corporate acculturation. These questions are
investigated in a study of MNC subsidiaries located in Australia, Ireland and
Singapore. Our data provide strong evidence that MNCs of all nationalities place the
greatest emphasis on financial metrics compared to other performance metrics.
Moreover, there are differences in the degree of emphasis on performance metrics
across MNC nationality. We found that Japanese and German MNCs place
significantly less emphasis on financial measures than US and UK MNCs. Our
hypotheses relating to the management of managers were also supported by the data. In
comparison with all other MNC nationalities, Japanese MNCs place greater emphasis
on the transfer of Japanese managers to overseas subsidiaries and less emphasis on
corporate acculturation. While some researchers have argued that management control
has become more isomorphic as a result of globalization, our results show that
companies from different nationalities diverge in their practices.
Introduction
Multinational corporations (MNCs) dominate
the competitive landscape and have a significant
influence on patterns of international trade and
investment. MNCs profoundly affect the process
of globalization, as products, labour standards,
management practices and technologies diffuse
across their subsidiaries. For researchers of
organizations, MNC evolution has offered an
important site for theory testing and develop-
ment. Traditional theory suggests that one of the
main motivators for multinational expansion is
the ability to exploit knowledge assets (Hymer,
1960). This is because MNCs have an ability to
transfer and exploit knowledge assets more
effectively in the intra-corporate context, as they
can economize on transaction costs (Caves, 1971;
Teece, 1981). As MNCs exploit invisible assets
such as manufacturing capability, brands and
British Journal of Management, Vol. 17, 153–165 (2006)
DOI: 10.1111/j.1467-8551.2005.00472.x
r2005 British Academy of Management
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