Management accounting change in a subsidiary organisation

Parent–subsidiary relationships are commonplace nowadays, yet surprisingly there is a paucity of research analysing their dynamics over time. This paper presents a (longitudinal) case study, illuminating the dynamics implicated when a UK chemicals company imposed its systems and rules on a new subsidiary. Drawing on observations from a longitudinal case study (from 1993 to 2001), the study considers: (1) the extent to which a parent imposes its (management accounting) systems,rules and procedures on a subsidiary; (2) the role which (local) political, cultural and institutional factors in a subsidiary play in shaping the dynamics of such change implementation; (3) how new systems and practices become accepted and take root as values and beliefs and how they supplement earlier norms? The study provides insight for the questions above, and draws on institutional theories and a power mobilisation framework to assist in the interpretation of observations. We find that the operations of the subsidiary company are influenced by inter-related forces, both inside and outside the organisation encompassing issues of power, politics and culture. As such, existing institutions in a subsidiary organisation are influenced, sustained, and changed by the socio-economic context in which the subsidiary is located. Organisational practices designed to secure external legitimacy are not however always symbolic and decoupled from internal operations

Knowledge Transfer within Western Multinationals' Subsidiary Units in China and Finland - The Impact of Headquarter Control Mechanisms, Subsidiary Location and Social Capital (summary section only)

It is suggested that the ability and practices of how the multinational corporation (MNC) manages knowledge transfer among its geographically dispersed subsidiary units are crucial for the building and development of firm competitive advantage. However, cross-border transfer of valuable organizational knowledge is likely to be problematic and laborious, especially within diversified and differentiated MNCs. Using data collected from 164 western multinational companies’ subsidiary units located in China and Finland, this study aims to investigate cross-border knowledge transfer within the MNC. It explores a number of factors that influence the transfer of knowledge among units in the differentiated MNC. The study consists of five individual papers. Paper 1 investigates a range of organizational mechanisms that may positively influence a subsidiary’s propensity to undertake knowledge transfers to other parts of the corporation. Paper 2 explores the impact of subsidiary location on the motivational dispositions of knowledge receiving units to value and accept knowledge from subsidiaries located in economically less advanced countries. Paper 3 examines the influence of social capital variables on knowledge transfer in dyadic relationships between foreign-owned subsidiaries and their sister and patent units. Paper 4 provides some initial insights into potentially different effects of trust and shared vision in intra-organizational vs. inter-organizational relationships. Using a case study setting, Paper 5 explores means and mechanisms used in transferring human resource management practices to Western MNCs’ business units in China from a cultural perspective. The results of the study show that MNC management through choices regarding organizational controls can encourage and enhance corporate-internal knowledge transfer. It also finds evidence that more knowledge is transferred from subsidiaries located in an industrialized country (e.g., Finland) than subsidiaries located in a developing country (e.g., China). While the study has highlighted the importance of social capital in promoting knowledge transfer, it has also uncovered some new findings that the effect of trust and shared vision may be contingent upon different contexts. Finally, in Paper 5, a number of mechanisms used in transferring selected HRM practices and competences to the Chinese business units have been identified. The findings suggest that cultural differences should be taken into consideration in the choice and use of different transfer mechanisms.

Community-managed forests and wildlife-friendly agriculture play a subsidiary but not substitutive role to protected areas for the endangered Asian elephant

Global conservation policy is increasingly debating the feasibility of reconciling wildlife conservation and human resource requirements in land uses outside protected areas (PAs). However, there are few quantitative assessments of whether or to what extent these `wildlife-friendly' land uses fulfill a fundamental function of PAs-to separate biodiversity from anthropogenic threats. We distinguish the role of wildlife-friendly land uses as being (a) subsidiary, whereby they augment PAs with secondary habitat, or (b) substitutive, wherein they provide comparable habitat to PAs. We tested our hypotheses by investigating the influence of land use and human presence on space-use intensity of the endangered Asian elephant (Elephas maximus) in a fragmented landscape comprising PAs and wildlife-friendly land uses. We applied multistate occupancy models to spatial data on elephant occurrence to estimate and model the overall probability of elephants using a site, and the conditional probability of high-intensity use given that elephants use a site. The probability of elephants using a site regardless of intensity did not vary between PAs and wildlife-friendly land uses. However, high-intensity use declined with distance to PM, and this effect was accentuated by an increase in village density. Therefore, while wildlife-friendly land uses did play a subsidiary conservation role, their potential to substitute for PAs was offset by a strong human presence. Our findings demonstrate the need to evaluate the role of wildlife-friendly land uses in landscape-scale conservation; for species that have conflicting resource requirements with people, PAs are likely to provide crucial refuge from growing anthropogenic threats. (C) 2014 Elsevier Ltd. All rights reserved.

The MNC as an externally embedded organization: An investigation of embeddedness overlap in local subsidiary networks

MNCs have been conceptualized as differentiated networks that, in turn, are embedded in external networks. Previous research has predominantly focused on the embeddedness of established subsidiaries into their local environment, omitting to shed light on the phenomenon of headquarters linkages to the local context which creates embeddedness overlap. We develop a model of why MNCs develop overlapping linkages to local subsidiary networks even if the subsidiaries have grown out of the initial start-up phase. Using detailed information on 168 European subsidiaries, we find that MNCs build and maintain more overlapping network ties when subsidiaries are high performers, hold important resources, operate in turbulent environments, and are closely connected to multinational actors as opposed to purely domestic firms.

Do multinationals really prefer to enter culturally distant countries through greenfields rather than through acquisitions? The role of parent experience and subsidiary autonomy.

Prior research has argued that multinational enterprises (MNEs) prefer to enter culturally distant countries through greenfields rather than through acquisitions, since acquisitions in such countries are costlier to manage. This argument contains two hidden assumptions: (1) the additional costs of acquisitions in culturally distant countries are the same for all MNEs; and (2) such acquisitions have no benefits over their greenfield counterparts. In this paper we relax these two assumptions by arguing that an MNE's preference for greenfields in culturally distant countries depends on its international and host-country experience, and on the level of autonomy it plans to grant the focal subsidiary. Analyzing 171 wholly owned greenfield investments and full acquisitions made by Dutch MNEs in 35 countries, we find that these MNEs prefer to enter culturally distant countries through greenfields, but that this preference is lower when they have little international experience, or plan to grant the focal subsidiary considerable autonomy in marketing. [ABSTRACT FROM AUTHOR]

Corruption and subsidiary profitability: US MNC subsidiaries in the Asia Pacific region

Would multinational corporation (MNC) subsidiaries be more profitable in host countries where corruption is less severe? Would MNC subsidiaries be more profitable in less corrupt countries if they focus on local sales? This paper examines the impact of the level of corruption on the profitability of US MNCs in the Asia Pacific region. Using foreign direct investment (FDI) data archived by the US Bureau of Economic Analysis and corruption data reported by the World Bank, we find that MNC subsidiaries located in countries with a lower level of corruption are more profitable. In addition, MNC subsidiaries with a greater focus on local sales are more profitable when the corruption level is low. This study contributes to the literature by showing that when local sales are important to MNC subsidiaries, a lower level of corruption by host countries positively affects the profitability of the MNC subsidiaries.

The Legitimacy of Subsidiary Issue Selling: Balancing Positive & Negative Attention from Corporate Headquarters

We consider how in issue selling, subsidiaries draw on different forms of legitimacy to attract corporate headquarters’ (CHQ) positive attention and minimise negative CHQ attention. Through case study evidence, we find that directing CHQ attention to subsidiary issues needs to be executed as a balancing act through forms of subsidiary legitimacy, namely; the personal legitimacy of key individuals at the subsidiary; consequential legitimacy vis-à-vis peer subsidiaries; and linkage legitimacy in the local environment. We develop a typology of subsidiary issue-selling roles and illustrate how negative CHQ attention results from a failure to legitimise issue selling.