Multinational subsidiary sales and performance in South East Asia

We extend the theory of the multinational enterprise (MNE) by exploring the concept of subsidiary-specific advantages (SSAs) as a driver for subsidiary performance. We investigate the relationship of host country-specific advantages (host CSAs) in the form of market attractiveness, SSAs and subsidiary sales as they affect subsidiary performance. From an original primary dataset of 101 British multinational (MNE) subsidiaries in six South East Asian countries, our analysis reveals three significant findings. First, host market attractiveness has a statistically positive impact on the performance of subsidiaries. Second, the three traditional SSAs of general management, marketing capabilities and invested capital enhance subsidiary performance. Third, we examine geographic direction and types of customers for subsidiary sales by following international accounting standards. We find that these subsidiaries generate on average 95 percent of total sales from the Asia Pacific region and 91 percent of total sales from external customers. Our findings have important research and managerial implications.

The empirical literature on multinational enterprises, subsidiaries and performance

Purpose – This paper aims to provide a synthetic review of the empirical literature on the multinational enterprise (MNE), subsidiaries and performance. Design/methodology/approach – The paper examines the following: the theoretical and conceptual foundation of multinationality (M) and performance (P) measures; the impact of MNE strategic investment motives on performance; the influence of contextual external and internal environment factors on performance; the strategy to optimize value chain activities of the MNE by cooperating with external partners in an asymmetric network, the key drivers of enhanced shareholder value and the implications of performance; and the need to access primary data provided by firms and managers themselves when analyzing the internal functioning of the MNE and its subsidiaries. Findings – The overall message from this literature review is that empirical research should be designed on the basis of relevant theoretical and conceptual foundations of the performance construct. Originality/value – The paper provides a systematic and synthetic review of theoretical and empirical literature.

Effect of acceptable use policy on employee computer use : case of Sri Lankan software development organizations

It is a known fact that some employees misuse the organizational computers to do their personal work such as sending emails, surfing the Internet, chatting, playing games. These activities not only waste productive time of employees but also bring a risk factor to the organization. This affects organizations in the software industry very much as almost all of their employees are connected to the Internet throughout them day./ By introducing an Acceptable Use Policy (AUP) for an organization, it is believed that the computer misuse by its employees could be reduced. In many countries Acceptable Use Policies are used and they have been studied with various perspectives. In Sri Lankan context research on these areas are scarce. This research explored the situation in Sri Lanka with respect to AUPs and their effectiveness./ A descriptive study was carried out to identify the large and medium scale software development organizations that had implemented computer usage guidelines for employees. A questionnaire was used to gather information regarding employee’s usual computer usage behavior. Stratified random sampling was employed to draw a representative sample from the population./ Majority of the organizations have not employed a written guideline on acceptable use of work computers. The study results did not provide evidence to conclude that the presence or non presence of an AUP has a significant difference in computer use behaviors of employees. A significant negative correlation was observed between level of awareness about AUP and misuse. Access to the Internet and organizational settings were identified as significant factors that influence employee computer misuse behavior.

International experiential diversity and performance at project organizations: The case of national football teams

Purpose– The purpose of this paper is to shed new light on the link between diversity in project teams and team performance by examining the effects of players’ international career diversity on the performance of national football teams. Design/methodology/approach– The paper draws upon the literature on project organizations and experiential diversity in teams. Using data on players’ international career backgrounds and team performance from the FIFA World Cup 2006, the authors test two hypotheses linking experiential diversity in teams and a measure of relative team performance. The dataset includes detailed individual background profiles of the 736 participating players and performance data from the 64 games played at the tournament. Findings– The findings suggest that different types of experiential diversity have contrasting effects on team performance in a time‐limited project team setting. Research limitations/implications– These findings encourage team diversity researchers to further examine the impact of experiential diversity in teams on team process and performance outcomes in future research. Practical implications– The findings particularly highlight the need to carefully manage experiential diversity in project team settings in order to benefit from access to diverse tacit resources, while at the same time avoiding that the integrative capacities of teams becoming overstretched. Originality/value– The paper is a step towards a better understanding of how diversity of individual career backgrounds affects team performance outcomes in project teams.

Transcending borders with international top management teams: a study of European financial multinational corporations

This paper investigates how changes in firm degree of internationalization are associated with the configuration of top management teams (TMT) based on a dataset of 41 large European firms in the banking and insurance industry, including detailed career profiles of the 264 executives that were serving on the TMTs of these firms at year-end 2002. Our findings suggest firms tend to match top executive profiles to their strategies. Entry into new foreign markets and new cultural zones was found to be associated with higher levels of international capacity at TMT level, whereas changes in international posture per se are not related to TMT international capacity. We discuss the interplay between firm strategies and internal structures in the context of firm internationalization and suggest directions for future research on TMTs

Regional business networks in the multinational retail sector

This article examines the network relationships of a set of large retail multinational enterprises (MNEs). We analyze under what conditions a flagship-network strategy (characterized by a network of five partners – the MNE, key suppliers, key partners, selected competitors and key organisations in the non-business infrastructure) explains the internationalisation of three retailers whose geographic scope, sectoral conditions and competitive strategies differ substantially. We explore why and when retailers will adopt a flagship strategy. The three firms are two U.K.-based multinational retailers (Tesco and The Body Shop) and a French-based global retailer (Moët Hennessy Louis Vuitton). We find evidence of strong network relationships for all three retailers, although each embraces network strategies for different reasons. Their flagship relationships depend on each retailer's strategic use of firm-specific-advantages (FSAs) and country-specific advantages (CSAs). We find that a flagship strategy can succeed in overcoming internal and/or environmental constraints to cross-border resource transfers, which are barriers to foreign direct investment (FDI). We provide recommendations on why and when to use a flagship-based strategy and which type of network partners to prioritize in order to succeed internationally.

Revisiting the 'modern' multinational enterprise theory: an emerging-market multinational perspective

Using Triad-based multinational enterprises as their empirical setting, influential scholars in international management uncovered key organizational characteristics needed to create globally integrated and locally responsive multinationals. They proposed a “modern” theory of multinationals' organization (Hedlund, 1994). But recently, a new generation of multinationals from emerging markets has appeared. Little is known about their organizational choices and some scholars even doubt that they leverage organizational capabilities altogether. Does the “modern” theory still hold in their case? This exploratory study of three emerging-market multinationals (EMNEs) discloses that for reasons related to their origin in emerging economies and to the competitive specificities of these economies, EMNEs approach the global and local conundrum in ways which are both similar – and vastly different – from recommendations of the “modern” theory. We inductively develop a new theory that accounts for the evolution of organizational capabilities in EMNEs to reconcile global integration and local responsiveness. We discuss its implications for the executives of both emerging and Triad-based multinationals.

Internal equity financing and the performance of multinational subsidiaries in emerging economies

We examine the internal equity financing of the multinational subsidiary which retains and reinvests its own earnings. Internal equity financing is a type of firm-specific advantage (FSA) along with other traditional FSAs in innovation, research and development, brands and management skills. It also reflects subsidiary-level financial management decision-making. Here we test the contributions of internal equity financing and subsidiary-level financial management decision-making to subsidiary performance, using original survey data from British multinational subsidiaries in six emerging countries in the South East Asia region. Our first finding is that internal equity financing acts as an FSA to improve subsidiary performance. Our second finding is that over 90% of financing sources (including capital investment by the parent firms) in the British subsidiaries come from internal funding. Our third finding is that subsidiary-level financial management decision-making has a statistically significant positive impact on subsidiary performance. Our findings advance the theoretical, empirical and managerial analysis of subsidiary performance in emerging economies.

Managing governance, risk and compliance for post-crisis regulatory change: a model of IS capabilities for financial organizations

The 2008-2009 financial crisis and related organizational and economic failures have meant that financial organizations are faced with a ‘tsunami’ of new regulatory obligations. This environment provides new managerial challenges as organizations are forced to engage in complex and costly remediation projects with short deadlines. Drawing from a longitudinal study conducted with nine financial institutions over twelve years, this paper identifies nine IS capabilities which underpin activities for managing regulatory themed governance, risk and compliance efforts. The research shows that many firms are now focused on meeting the Regulators’ deadlines at the expense of developing a strategic, enterprise-wide connected approach to compliance. Consequently, executives are in danger of implementing siloed compliance solutions within business functions. By evaluating the maturity of their IS capabilities which underpin regulatory adherence, managers have an opportunity to develop robust operational architectures and so are better positioned to face the challenges derived from shifting regulatory landscapes.

Patient and public involvement in healthcare quality improvement: how organizations can help patients and professionals to collaborate

Citizens across the world are increasingly called upon to participate in healthcare improvement. It is often unclear how this can be made to work in practice. This 4- year ethnography of a UK healthcare improvement initiative showed that patients used elements of organizational culture as resources to help them collaborate with healthcare professionals. The four elements were: (1) organizational emphasis on nonhierarchical, multidisciplinary collaboration; (2) organizational staff ability to model desired behaviours of recognition and respect; (3) commitment to rapid action, including quick translation of research into practice; and (4) the constant data collection and reflection process facilitated by improvement methods.

The subsidiaries of multinational enterprises operate regionally, not globally

Purpose – The purpose of this paper is to examine the determinants of home-region strategy of the multinational subsidiary and the impact of such a strategy on its performance. The author draws upon new internalization theory to develop a theory-driven model and empirically tests the simultaneous relationships between home-region strategy and performance of the subsidiary. Design/methodology/approach – The author tests the model using a simultaneous equation statistical technique on an original, new data set of publicly listed multinational subsidiaries operating in the ASEAN region, with parent firms’ headquarters across the broad triad. Findings – There are three significant findings. The first finding is that subsidiary-level downstream knowledge (marketing advantages), and the geographic location of the subsidiary in the same home region as of the parent firm are key antecedents of a subsidiary’s home-region strategy. The second finding is that a subsidiary’s profitability reduces home-region orientation; however, home-region strategy has an insignificant effect on performance. The third finding is that these subsidiaries generate on average 92 per cent of their total sales in the home region (the Asia Pacific). Originality/value – The author advances the existing literature on the regional nature of parent-level multinational enterprises by demonstrating that their quasi-autonomous subsidiaries also operate mainly on a home-region basis.