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Knowledge Flows and the Structure of Control Within Multinational Corporations
Abstract
Virtually all research on strategic control within multinational corpo- rations (MINCs) has focused on macro differences in control systems and processes across entire MNCs. Taking a less macro (i.e., subsid- iary-specific contingency perspective), this article examines how, within the same corporation, the nature of corporate control might also vary systematically across subsidiaries. Differences in subsidi- ary contexts are analyzed along two dimensions: (a) the extent to which the subsidiary is a user of knowledge from the rest of the cor- poration and (b) the extent to which the subsidiary is a provider of such knowledge to the rest of the corporation.
... Researchers have argued that HCNs can better respond to local demands, while PCNs are better at integration (Harzing, 2001;Harzing, Pudelko, & Reiche, 2016;Tan & Mahoney, 2006). For foreign subsidiaries with a local-market-seeking motive, which represent a major type of foreign subsidiary 1 (Dunning & Lundan, 2008), it follows that a seemingly sensible succession strategy is to use an HCN subsidiary general manager (GM) to improve local responsiveness (Chung, Park, Lee, & Kim, 2015;Gupta & Govindarajan, 1991). This is because the local-market-seeking subsidiaries' "primary objective… is to sell products and services to new customers in host country markets" (Nguyen & Rugman, 2015: 115). ...
... The role of PCNs in controlling the subsidiary on behalf of the headquarters is also gaining increasing prominence in the literature (Collings, Scullion, & Dowling, 2009;Tan & Mahoney, 2006). In contrast, HCNs are viewed as being more familiar with the host country's environment and more effective in localizing the subsidiary's operations (Gupta & Govindarajan, 1991;Michailova et al., 2023). In addition, the extant literature suggests that HCN managers usually have a stronger commitment to and identify more closely with the local operations and environment (Shin, Hasse, & Schotter, 2017;Suutari, 2003). ...
... nationality holds that HCNs are more familiar with the host country's environment (Michailova et al., 2023) and can more effectively maximize the performance-enhancing potential of a local-market-seeking strategy (Chung et al., 2015;Gupta & Govindarajan, 1991). Moreover, in the field of strategic leadership, recent work on the origin of subunit managers has shown that as internal candidates have higher performance ratings and firm-specific knowledge, it is sensible to staff the subunit manager position with internal candidates (DeOrtentiis, Iddekinge, Van, Ployhart, & Heetderks, 2018). ...
... A modo de síntesis, de esta literatura pueden extraerse dos grandes hipótesis. En primer lugar, que las empresas extranjeras tienden a optar por dirigentes con perfiles más globales, provenientes generalmente del país del cual es originaria la firma, cuando el énfasis está puesto en la integración vertical de sus negocios y en la difusión de tecnología y/o de técnicas específicas de gestión (Gammelgaard, Holm y Pedersen, 2004;Gupta y Govindarajan, 1991;Schuler, Dowling y De Cieri, 1993;Taylor, Beechler y Napier, 1996). Este suele ser el caso de las empresas que buscan especializarse en la producción y/o provisión de bienes y/o servicios con estándares globales (Morgan y Kristensen, 2006). ...
... Las transformaciones asociadas a la apertura comercial y a la desregulación de los mercados, como indica Szlechter (2012), estimularon a las empresas extranjeras a adoptar los principios de organización y gestión propios de los países centrales. El aumento en la proporción de presidentes expatriados puede interpretarse, tal como expresan Gammelgaard et al. (2004), Gupta y Govindarajan (1991), Taylor et al. (1996), entre otros, como una forma de acelerar la transición 7 Este fenómeno ha sido abordado desde el enfoque del análisis de las redes sociales y se ha focalizado, en líneas generales, en el estudio de los "entrelazamientos" corporativos en los países centrales (Carroll y Fennema, 2002;Carroll, 2010;Staples, 2012;Windolf, 2002; entre otros). En el último tiempo han empezado a desarrollarse algunos estudios con esta misma óptica para América Latina: Salas-Porras (2006 para el caso mexicano, Lluch y Salvaj (2012) para el caso argentino durante la etapa de la ISI, y Paredes (2013), también para el caso argentino, pero en la época actual. ...
En este trabajo se analizan los vínculos existentes entre las transformaciones económicas que experimenta la economía argentina entre 1976 y el 2001, el tipo de intervención que despliega el Estado en relación al capital extranjero durante esos años, y el perfil de los dirigentes que escogen las empresas extranjeras para comandar sus negocios al interior del país. Sobre la base de un minucioso estudio de las trayectorias de vida de los individuos que presidieron empresas extranjeras durante el último cuarto del siglo XX, mostraremos que si bien existe una tendencia creciente a seleccionar directivos con perfiles más globales, aún se mantiene, en un considerable grupo de empresas, una fuerte inclinación por los directivos con perfiles estrechamente vinculados al ámbito local y, en particular, al Estado.
... Kickback/Bribery fraud attempts. Job rotation procedures are also beneficial for socialization and creating cross trained employees (Gupta and Govindarajan, 1991). ...
The purpose of this thesis is to develop an understanding about internal fraud and corruption problem in Turkish construction industry. During the research, the reasons behind the internal fraud and corruption problem, types of internal fraud and prevention methods for internal fraud and corruption were investigated and various recommendations were developed. Moreover, fraud risk awareness questionnaire was implemented to understand the likelihood occurrence of internal fraud types in construction sector and proactive and reactive measures against these problems. Moreover, types of fraud incidences experienced by Turkish construction companies were also investigated with the questionnaire. The questionnaire reached to 89 respondents and, recommendations to prevent internal fraud and corruption problem were developed by detailed statistical analyses.
... However, as the J o u r n a l P r e -p r o o f role of the subsidiary gradually evolves as the subsidiary's experience in technological innovation activities accumulates and its status in local countries grows, an increasing number of studies have shifted their attention to the subsidiary as the center point of examination (Michailova & Mustaffa, 2012). Often playing the roles of Strategic Leader (Bartlett & Ghoshal, 1986), Global Innovator and Integrated Player (Gupta & Govindarajan, 1991), and World ...
... Another work by Egwake, Amos, and Nicodemus (2020) reveals that the components of technology transfer significantly positively affect the productivity of selected automobile manufacturing companies in Nigeria. Gupta and Govindarajan (1991) explained that multinational companies are called 'differentiated networks' where knowledge is formed and transferred to inter-related units. This is because any organization that is capable of transferring knowledge successfully to another is more productive and has the tendency to grow than organizations that cannot transfer knowledge, especially in the global business environment. ...
Purpose: The objective of this study is to examine joint venture, technology transfer on the performance of Nigeria's oil and gas sector between 1981-2021. Theoretical Framework: It is indisputable that the Nigerian oil and gas sector is not at peak performance when compared to what is obtainable from its peers in the Organization of Petroleum Exporting Countries (OPEC) (Iheukwumere, 2021; OPEC, ASB 2020). One of the factors responsible for the abysmal performance is ineffective and incoherent technology transfer management through joint venture arrangements (Odusina, 2022). Therefore, there is a need to empirically investigate the impact of joint venture arrangements on Nigeria's oil and gas sector production which lacks sufficient research. Methodology: The ex-post facto design was used where data were collected through secondary sources on the aggregate output of the joint venture companies and the total yearly output of the upstream sector of Nigeria’s oil and gas industry represented the performance of the Nigerian oil and gas sector in the period 1980 to 2021. The collected data were analyzed using the Quantile Autoregressive Distributed Lag (QARDL) approach to test for short and long-run impacts. Findings: The study revealed that there is a significant impact of joint venture arrangements on oil and gas production in both the short run and long run. Research, Practical & Social Implication: The study therefore recommends that policymakers and industry stakeholders should carefully evaluate the terms and conditions of joint ventures to ensure their alignment with the goals of maximizing oil and gas production. Originality/Value: The use of joint venture as a proxy for technology transfer in the production of oil and gas in Nigeria and use of secondary data between 1980-2021 for joint ventures is an eye-opener for further exploration of the study areas in oil and gas production management, particularly in the area of technology transfer, which lacks sufficient research.
... Environmental uncertainty has pushed businesses to embrace green practices such as green buying, internal management, and logistics (Lo & Shiah, 2016). When there is a great deal of uncertainty, businesses attempt to collect and analyze information often and rapidly to handle environmental changes (Gupta & Govindrajan, 1991). According to Ibrahim et al. (2018), when environmental uncertainty exists, businesses are required to implement environmental innovations to create the ability to enhance environmental performance in uncertain settings. ...
Green practices are still uncommon among public workers in the course of their daily work; they do not assist in focusing on saving costs or contributing to environmental preservation. This research aims to examine what factors can influence employees at Politeknik Port Dickson (PPD), Malaysia to adopt green practices. Using the Technological, Organizational and Environmental (T-O-E) theory, this study proposed a research model that consists of green practice benefits, technological factors (compatibility and complexity), organizational factors (management support), and environmental factors (governmental support and environmental uncertainty). Moreover, the mediating role of green practice benefits was tested between the relationship of technological factors, environmental factors and green practice adoption. The online survey was conducted to get feedback from the employees in PPD by using a purposive sampling technique. A total of 153 responses were received and the final data were analyzed using SmartPLS 4.0. The findings found that green practice benefits positively influence green practice adoption. Meanwhile, compatibility (positive) and complexity (negative) influence green practice benefits. The mediating effect result has shown that green practice benefits mediated the relationship between technology factors (compatibility and complexity of the technology) and green practice adoption. The outcome of this study asserts to aid the management and employees at PPD in implementing green practices more efficiently in the future to safeguard the environment's well-being and save administrative costs in polytechnics.
... Our particular focus in this perspective piece derives from the fact that in recent times, the competitive advantage of the MNE is long and increasingly recognised, as its capacity to source and assimilate knowledge from its globally dispersed subsidiaries (Gupta and Govindarajan, 1991;Doz and Wilson, 2012;Doz et al., 2001). In this regime, the most powerful and important subsidiaries within the MNE are the ones that can source, absorb and transform knowledge for valuable product innovation. ...
Purpose
The authors’ contention in this paper is that the expression of subsidiary strategy in IB literature has become fragmented and incomplete. Therefore, this study aims to propose a rethink on how IB scholarship approaches the important issue of subsidiary strategy by holistically examining the discrete and integrated set of activities, choices and decisions that constitute the subsidiary strategy process for, in this context, assuming a competence-creating role within the multinational enterprise (MNE).
Design/methodology/approach
A conceptual model is designed to illustrate the holistic process of subsidiary strategy from assigned to assumed role and how a subsidiary can navigate a pathway to elevated performance and survival.
Findings
The paper identifies the key integrated elements that constitute a holistic strategic process that can enhance a subsidiary’s standing within the MNE and maximise its survival prospects.
Research limitations/implications
Particular focus is placed on subsidiaries that strategise to advance their internal corporate role to competence creator via upgraded knowledge capabilities.
Originality/value
This paper offers a roadmap for IB scholars to contribute to a future discourse around the subsidiary strategy process for assuming a competence-creating role.
En este artículo de reflexión se muestra la importancia de la comunicación al interior de las organizaciones, y cómo ésta apalanca las acciones para el mejoramiento continuo de los procesos, ya que a través de la dinámica del Capital Intelectual (Capital Humano, Capital Estructural y Capital Relacional) existente en la empresa, se estructuran innovaciones en sus productos y procesos, para de esta forma dar respuesta a los cambios del mercado y así aumentar la capacidad de cumplir con los índices y requisitos establecidos.
En este artículo, inicialmente se presenta cómo la gestión del conocimiento en las organizaciones brinda resultados prácticos y métodos eficientes en la cadena de valor, seguidamente se ilustra sobre la innovación y los procesos de aprendizaje estudiados mediante un proceso interactivo de aprendizaje que se desarrolla entre las empresas y su entorno y la importancia de la comunicación organizacional, como la plataforma de la generación, difusión y apropiación del conocimiento, para finalizar en el tercer apartado evidenciamos la relación existente entre el mejoramiento continuo de los sistemas de gestión y la comunicación organizacional.
Palabras clave: gestión del conocimiento, sistemas de Gestión, innovación, conocimiento, mejora continua.
This article reports the results of a study conducted in five Western European countries of attitudes and expectations of representatives of 110 host-country organizations (HCOs) toward expatriate managers leading subsidiaries in those countries. Findings are classified by the HCOs' positions regarding the following themes: preferred nationality, desired position in the MNC hierarchy, and present and expected personal behavior and interaction with host-country employees. The implications emphasize the importance of changing patterns of personal behavior and improving selection and training of such managers.
This paper investigates the relationship between organizational technology, specifically the degree of routineness of work, and the social structure and goals of health and welfare organizations. Hypotheses relating four aspects of social structure and two aspects of organizational goals with the degree of routine work are tested with data from sixteen social welfare and health organizations located in a midwestern metropolis in 1967. The social structure of organizations with more routine work are found to be more centralized, more formalized, and to have less professionally trained staffs, but no relationship with stratification is found. Organizations with routine work are further found to emphasize goals of efficiency and the quantity of clients served, not innovativeness, staff morale, or quality of client services.
