Control mechanisms employed between headquarters and subsidiaries in Multinational Enterprises (MNEs)

2016 ◽  
Vol 26 (4) ◽  
pp. 493-516 ◽  
Author(s):  
Jaithen Alharbi ◽  
Hamid Gelaidan ◽  
Abdullah Al-Swidi ◽  
Abubakr Saeed
Keyword(s):  
Multinational Enterprises ◽  
Large Scale ◽  
Empirical Work ◽  
Primary Data ◽  
Control Mechanisms ◽  
Successful Operation ◽  
Gulf Region ◽  
Output Control ◽  
Informal Control ◽  
Content Type

Purpose This study aims to investigated the control mechanisms of headquarters exercised over their subsidiaries and is conducted with the help of primary data. Design/methodology/approach The headquarters–subsidiary model used in this study has four components of control in it: personal centralised control (PCC), bureaucratic formalised control (BFC), output control (OUT) and informal control (INFO). These controls (as an agency mechanism) provide a solid platform on which other mechanisms can be built. Using a data collected from 147 multinational enterprises (MNEs) operating in the Kingdom of Saudi Arabia, the influence of each of these factors on this selection is empirically tested with the help of primary data. Findings The study found that Anglo-Saxon countries heavily use impersonal types of control mechanisms, specifically bureaucratic formalised control and output control. Compared to the USA, the level of control in Oriental subsidiaries is less; or, put differently, the latter enjoy a greater degree of autonomy than US subsidiaries. The complementarities of these control mechanisms may be linked to earlier studies that show that successful organisations combine tight control with more open, informal and flexible information and communication exchanges. A focus that bends too much towards formal control or too much towards informal control may threaten a company’s existence. This research provides an empirical explanation on this premise. Research limitations/implications The methodology adopted for this study can be extended for similar studies in the Middle East or in Gulf Council Cooperation countries. Practical implications The study show that MNEs from different countries often have different dominant control mechanisms and organisational models. This is partly due to different industry distributions, but it is also related to cultural/societal differences between countries. These differences should be considered when searching for a partner in cross-national mergers and acquisitions. Failure to do so could hinder the successful operation of a merger that seems to be perfect from a financial and competitive point of view. Originality/value The study explored variations in the extent of control mechanisms, according to country of origin and organisational characteristics, in a challenging country of domicile. This empirical work not only replicates earlier studies, retesting propositions encountered in the existing literature, but also sheds new light on the challenges of doing business in the Gulf region, and the consequences of the large scale usage of expatriates.

scholarly journals Control mechanisms of MNEs: an empirical study

2016 ◽  
Vol 24 (3) ◽  
pp. 279-300 ◽  
Author(s):  
Satwinder Singh ◽  
Geoffrey Wood ◽  
Jaithen Alharbi ◽  
Tamer K. Darwish
Keyword(s):  
Multinational Enterprises ◽  
Economies Of Scale ◽  
Country Of Origin ◽  
Foreign Firms ◽  
Primary Data ◽  
Control Mechanisms ◽  
Gulf Region ◽  
Content Type ◽  
Local Staff ◽  
The Impact

Purpose This purpose of this paper is to explore variations in the extent of control mechanisms, according to country of origin and organizational characteristics, in a challenging country of domicile. Design/methodology/approach A survey research design involving the use of a questionnaire as the primary data source was adopted. A total of 350 subsidiaries were initially randomly selected and contacted in person, or via telephone and e-mail, of which 147 agreed to take part in the study and responded to the survey. Findings The authors find that Multinational Enterprises (MNEs) from highly financialized Liberal Market Economies will be associated with a greater reliance on formalized control mechanisms; this will enable the MNE’s headquarters to closely monitor subsidiary managers according to objective measures, to ensure that the maximum shareholder value is released. Research limitations/implications This study reveals a greater reliance on control mechanisms in larger firms, reflecting a desire to maximize bureaucratic economies of scale. Practical implications The authors find that the presence of expatriates regardless of country of origin leads to greater decentralization, suggesting foreign firms do not trust local staff. Originality/value This is one of the few studies of this nature conducted for the region of Middle East – and the only one the authors are aware of for Saudi Arabia. Further, it sheds new light on the impact of contextual circumstances on how closely firms monitor their subsidiaries, the challenges of doing business in the Gulf region and the consequences of the large-scale usage of expatriates.

scholarly journals A meta-crisis banking efficiency study in the MENA region

2020 ◽  
Vol 11 (9) ◽  
pp. 2087-2112
Author(s):  
Ioannis Anagnostopoulos ◽  
Emmanouil Noikokyris ◽  
George Giannopoulos
Keyword(s):  
Empirical Work ◽  
Efficiency Index ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Gulf Region ◽  
Bank Efficiency ◽  
Content Type ◽  
Conventional Banks ◽  
The Cost ◽  
Revenue Efficiency

Purpose The purpose of this paper is to comparatively examine the cost and the overlooked revenue efficiency of Islamic and commercial banks in the aftermath of the crisis, operating in nine MENA-based countries during the 2010-2017 financial period, where the established empirical work is relatively limited. The authors also update the research where they use recent data sets and they provide for a targeted, structured literature review pre- and post-crisis in the Gulf region. Design/methodology/approach The authors examine cost and revenue efficiency of 25 major Islamic banks (IBs) and 25 major conventional banks (CBs). They conduct tests on the determinants of such variables. In the first stage of the analysis, they measure efficiency by using the data envelopment analysis (DEA) technique. The analysis performs regressions where these also reveal that the bank efficiency index is influenced by various bank type-specific attributes. It also seems that tighter restrictions on bank activities are negatively associated with bank efficiency. Second stage analysis, which accounts for banking environment and bank-level characteristics, confirms these results. Findings Conventional banks are both more cost and revenue efficient than Islamic banks over the period under examination. The analysis also reveals that the bank efficiency index is influenced by bank-type attributes. Greater presence of fixed capital resources has positive effects on growth in both Islamic and conventional banking. The major constraints impeding Islamic banking growth include labour costs. The authors examine whether and how bank-type orientation affects the cost and revenue efficiency of conventional and Islamic banks. They find that post-crisis Islamic banks underperform their conventional counterparts on both accounts within a mixed banking system. Research limitations/implications This study did not include comparative data before the 2008 financial crisis. There is also a great deal of heterogeneity among Islamic banks in the samples that have been examined here and by other researchers and the constructed efficiency scores should be interpreted cautiously as divergent Islamic banks are pooled in the same samples. Practical implications This study identified factors that may help bank managers to improve their financial outlook by controlling revenue and cost efficiency profitability. These factors could as well help to understand how some indicators affect both cost and revenue efficiency, particularly in Islamic banking. It also seems that tighter restrictions on Islamic bank activities are negatively associated with bank efficiency. Islamic banks that directly compete with their conventional counterparts in the aftermath of the crisis are less efficient on both the cost and revenue frontiers. They are potentially hindered by the differential regulations of supervising authorities in dual banking systems. Social implications The authors provide recommendations regarding regulatory and other issues that are relevant to Islamic banking and further research is suggested. Findings are relevant to a variety of stakeholders (managers, policymakers and regulators). Islamic banking authorities could re-examine the benefits of partially moving to a more standardized/conventional system of banking by lifting some trading restrictions. In addition, developing and maintaining managerial skills is an indispensable instrument for the long-term endurance of any system. A related aspect is thus an effort to determine the holistic efficiency (including managerial) of Islamic banks as a guide for policymakers to improve managerial performance. Originality/value There is relatively limited empirical work that investigates the efficiency between Islamic and conventional banking in the aftermath of the crisis in the Gulf region despite the growing importance of this region on political and economic levels. The authors also examine the revenue efficiency measure often under-researched in the literature and particularly important for comparative studies. Overseas-owned banks have attained much higher infiltration levels in middle-eastern countries over the past decade. It has also been suggested that market penetration differences may also be related to bank efficiency concerns among countries and their financial systems as opposed to types of banks.

Trust and dynamic governance mechanisms in the university-industry R&D alliances

2020 ◽  
Vol 11 (2) ◽  
pp. 171-192
Author(s):  
Somchai Ruangpermpool ◽  
Barbara Igel ◽  
Sununta Siengthai
Keyword(s):  
Research Collaboration ◽  
Control Mechanisms ◽  
Governance Mechanisms ◽  
Informal Control ◽  
Content Type ◽  
Case Research ◽  
Thai Government ◽  
The University ◽  
University Industry ◽  
Depth Interviews

Purpose This paper aims to examine how the dynamic interplay of governance mechanisms of the university-firm R&D alliance reduces obstacles and enables the successful commercialization of research collaboration output. Design/methodology/approach A longitudinal case research and retrospective strategy were used to collect relevant data and information in the four university-and-firm alliance teams collaborating on R&D projects in Thailand during 2008-2014. In-depth interviews and meetings were conducted with representatives of all partners and R&D project teams. Findings The authors found that formal and informal control mechanisms act as complementary forms of governance. The informal control (trust) serves as the frame of intentions whether the formal control is interpreted as a guideline or a commitment. Both formal and informal control mechanisms must be put in place to successfully and sustainably develop collaborative research into a commercial product. Research limitations/implications This study investigated four Thai government-funded research collaboration teams from a single industry. It would be worth investigating such research collaboration in other industries and those without any government funding. Originality/value This study applied an exploratory case research method which is rarely used in research on R&D alliance teams. It generates cross-functional insights on how to build trust in such R&D context, especially in an emerging economy.

scholarly journals External supply chain flexibility and product innovation performance

2018 ◽  
Vol 52 (9/10) ◽  
pp. 1981-2004 ◽  
Author(s):  
Wai Wai Joyce Ko ◽  
Gordon Liu ◽  
Isaac K. Ngugi ◽  
Chris Chapleo
Keyword(s):  
Supply Chain ◽  
Product Innovation ◽  
Innovation Performance ◽  
Control Mechanisms ◽  
Chain Flexibility ◽  
Informal Control ◽  
Content Type ◽  
Differential Effects ◽  
The Relationship ◽  
Normative Integration

Purpose This paper aims to examine the effect of external supply chain (SC) flexibility on the product innovation performance of small- and medium-sized enterprises (SMEs) and the contingent role of informal control mechanisms in moderating such an effect. Design/methodology/approach This study conducts a cross-sectional questionnaire survey of 236 UK-based SME manufacturers. Findings Inbound supplier flexibility (ISF) has a stronger positive effect on SMEs’ product innovation performance than outbound logistics flexibility (OLF), and that the strength and direction of both effects depend on informal control mechanisms. Lead supplier influence negatively moderates the relationship between ISF and product innovation performance but positively moderates the relationship between OLF and product innovation performance. Normative integration positively moderates the relationship between ISF and product innovation performance. Research limitations/implications This study enriches SC flexibility studies by focusing on understanding the differential effects of ISF and OLF on product innovation performance, as well as the role that contingency factors play in these relationships in the SME context. Practical implications To promote product innovation performance, SME managers should focus on building good relationships with their suppliers rather than their logistics service providers. SME managers should be particularly aware of the different types of informal control mechanisms that govern their SC relationships and adjust their managerial approaches accordingly. Originality/value This study distinguishes between ISF and OLF and examines their impacts on SMEs’ product innovation performance. This study investigates the differential effects of lead supplier influence and normative integration on the relationship between external SC flexibility and SMEs’ product innovation performance.

US unconventional monetary policy and Islamic equity indices

2018 ◽  
Vol 11 (4) ◽  
pp. 575-590 ◽  
Author(s):  
Sayyed Mahdi Ziaei
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Large Scale ◽  
Empirical Work ◽  
Unconventional Monetary Policy ◽  
Monetary Policy Shocks ◽  
Content Type ◽  
Term Spread ◽  
Us Economy ◽  
Policy Shocks

Purpose This paper aims to constitute to the first empirical work that investigated the effects of US unconventional monetary policy shocks on Islamic equities. Design/methodology/approach The authors used the spread between sovereign (term spread) and corporate (corporate spread) yields as proxies of unconventional monetary policy in times that FED implemented different rounds of large-scale asset purchasing programs. Findings This paper demonstrates that monetary policy shocks have significant effects on Islamic equities. The analysis showed substantial evidence that the corporate spread innovation was reflected as a positive signal in Islamic equity markets and has a larger impact on Islamic low leverage equities than term spread. Originality/value The objective of this paper is to shed some insight into the effects of US unconventional monetary policy on low leverage financial assets. It is hypothesized that during this period, specifically from November 2008, unconventional monetary policy and zero bound interest rates have been implemented in the US economy. However, the strength of effects of this range of policies on Islamic financial products is unidentified.

scholarly journals Innovation outcomes of knowledge-seeking Chinese foreign direct investment

2015 ◽  
Vol 9 (1) ◽  
pp. 73-96 ◽  
Author(s):  
Xianming Wu ◽  
Nathaniel C. Lupton ◽  
Yuping Du
Keyword(s):  
Organizational Learning ◽  
Absorptive Capacity ◽  
Multinational Enterprises ◽  
Innovation Performance ◽  
Primary Data ◽  
Content Type ◽  
Chinese Multinationals ◽  
Positive Direct ◽  
Knowledge Seeking ◽  
The Impact

Purpose – The purpose of this paper is to investigates how organizational learning, absorptive capacity, cultural integration, specialization of the acquired firm and characteristics of transferred knowledge impact innovation performance subsequent to overseas acquisitions. Design/methodology/approach – Survey responses from 222 Chinese multinational enterprises engaged in overseas acquisitions. Findings – Differences between acquiring and acquired firms’ capabilities, while having a positive direct influence, suppress the positive impact of organizational learning and absorptive capacity, suggesting that multinationals require some basic level of capabilities to appropriate value from overseas acquisitions. Research limitations/implications – This paper investigates the impact of knowledge-seeking overseas acquisition of Chinese multinationals on innovation performance, as this appears to be the primary motive for making such acquisitions. Practical implications – Knowledge-seeking overseas acquisition should be based upon the absorptive capacity of the acquiring firm and complementarity between both firms. In knowledge-seeking overseas acquisitions, establishing an effective organizational learning mechanism is necessary for improving innovation performance. Originality/value – This paper reports on the behaviour and innovation performance of Chinese multinationals through analysis of primary data.

Distance is a Janus: an exploratory study of offshored innovation

2018 ◽  
Vol 35 (3) ◽  
pp. 518-546 ◽  
Author(s):  
Melanie P. Lorenz ◽  
Jack Clampit ◽  
Jase R. Ramsey
Keyword(s):  
Multinational Enterprises ◽  
Secondary Data ◽  
Distance Measures ◽  
Research Network ◽  
Primary Data ◽  
Negative Effects ◽  
Host Countries ◽  
Firm Level ◽  
Content Type ◽  
Innovation Outcomes

Purpose A dilemma exists in that many view offshoring as a tradeoff between cost efficiency and innovation. The purpose of this paper is to reconcile this dilemma by showing how and why offshoring to institutionally distant host countries may result in innovation. The authors introduce an institutional lens in order to understand how offshoring to institutionally distant locales affects innovation outcomes of multinational enterprises. This lens is aimed to provide an analytical tool that is less coarse and less overwhelmingly focused on institutional distance (ID) as a harsh and certain harbinger of reduced innovation performance. Design/methodology/approach The authors use primary data from the Offshoring Research Network as well as secondary data from the Frasier Institute on Economic Freedom, and Hofstede’s cultural value survey to empirically assess the distinct effects of distance on innovation at the firm level. Findings The authors have developed a model of distance and innovation which goes beyond the traditional assumption of distance as overwhelmingly negative. Whereas in some cases, the positive effect of formal and informal distances outweigh the negative effects stimulating innovation; in other cases, the negative effects of distance hamper innovation. Finally, some elements of distance may not have an impact on innovation outcomes at all. Research limitations/implications While previous research stresses the negative effects of distance in general, the authors provide an ID model which, in the context of offshoring, takes into account potential positive, negative, or no effects. Practical implications The study presents global supply chain managers with a reference framework for making strategic offshoring relationships decisions. Originality/value By unbundling the inherently confounding formative construction of distance measures, eschewing the reflexive assumption that distance is always negative, and mapping theories specific to the application of distinct institutional logics to specific value-enhancing business activities (i.e. innovation), this study offers a more accurate and complete institutional picture that helps reconcile institutional theory with an empirical record that often fails to find what it predicts.

Do land transfers to international investors contribute to employment generation and local food security?

2015 ◽  
Vol 42 (12) ◽  
pp. 1121-1138 ◽  
Author(s):  
Bamlaku Alamirew ◽  
Harald Grethe ◽  
Khalid Hassan Ali Siddig ◽  
Tesfamicheal Wossen
Keyword(s):  
Food Security ◽  
Large Scale ◽  
Local Food ◽  
Local Level ◽  
Average Treatment Effect ◽  
Primary Data ◽  
Land Grabbing ◽  
Content Type ◽  
Employment Generation ◽  
International Investors

Purpose – Like many countries in the developing world, Ethiopia has leased out a huge amount of land to foreign investors. However, empirical evidence on the contribution of international investments to employment generation and food security is limited. The purpose of this paper is to examine the contribution of large-scale farms to local-level food security in Bako Tibe District, Oromia Region. Design/methodology/approach – Primary data were collected from 200 randomly selected households from two purposefully selected villages in the district. Secondary data were collected from government offices and the literature. Propensity score matching was used to match households based on observable characteristics. Using the World Food Programme (WFP) approach, the food consumption score (FCS) of households was calculated. Finally, the Average Treatment effect for the Treated was determined. Findings – Findings indicate that foreign land deals increase the odds of households falling into food insecurity and that the employment opportunities are both temporal and marginal. Furthermore, these land deals result in a decline of households’ FCS and thus have a negative effect on households’ food security. Research limitations/implications – The result is based on a case study which is not generalizable to the whole of Ethiopia. Practical implications – The result implies that future endeavours should resort to substantial changes in the principles of investment as well as the design and enforcement of contracts on land transfers so that international investors can commit to objectives beyond private profit. Originality/value – It examines the effect of large-scale land transfers commonly termed as land grabbing on local food security. The paper makes an important contribution to the current policy debates regarding land grabbing in Ethiopia as research about the contribution of land deals to the food security is limited.

Tourist experience on traditional pastries in UNESCO heritage city

2020 ◽  
Vol 122 (12) ◽  
pp. 3885-3897
Author(s):  
Cheng Ling Tan ◽  
Sook Fern Yeo
Keyword(s):  
Service Quality ◽  
Design Methodology ◽  
Large Scale ◽  
Brand Image ◽  
Qualitative Content Analysis ◽  
Secondary Data ◽  
Primary Data ◽  
Future Research ◽  
Content Type ◽  
Qualitative Research Design

PurposeIn recent years, the traditional pastries industry has gained popularity among tourists due to the advantage of the pastries location at UNESCO Heritage city, Penang. However, the little research focussed on this particular industry, and there is lack of evidence of the tourists' experience with the traditional pastries and how these attributes affect their revisit decision.Design/methodology/approachThe study utilizes a qualitative research design to gain in-depth understanding on tourists' thought and their repurchase decision. Secondary data were collected via TripAdvisor with 68 tourists who visited the most popular three pastries shops namely, Him Heang, Ghee Hiang and Min Xiang Tai, which are later analysed using qualitative content analysis.FindingsThe findings revealed that tourists generally concerned about the service quality, value, brand image and atmospherics that could affect their repurchasing decision. Particularly, the staff service quality has been viewed as the upmost important attribute to influence the tourists' decision. Therefore, the pastries shops shall ensure that the staff who serve the tourists shall be well trained to satisfy the tourists' enquiry.Research limitations/implicationsThe limitation concerning the interpretation of the secondary data based on the feedbacks and comments of the tourists may derive the bias possibility. Future research might consider the large-scale primary data to extend the findings.Originality/valueLimited research exists on the tourists' experience which affects the repurchasing decision in pastries industry. This study provides valuable information for pastries shops and researchers interested in this area.

scholarly journals An intelligent hot-desking model harnessing the power of occupancy sensing data

Facilities ◽  
2017 ◽  
Vol 35 (13/14) ◽  
pp. 766-786 ◽  
Author(s):  
Peter Benjamin Cooper ◽  
Konstantinos Maraslis ◽  
Theo Tryfonas ◽  
George Oikonomou
Keyword(s):  
Real Estate ◽  
Private Sector ◽  
Large Scale ◽  
Sensor Data ◽  
Primary Data ◽  
Base Case ◽  
Content Type ◽  
Smart Building ◽  
The City ◽  
Work Type

Purpose The purpose of this paper is to develop a model to harness occupancy sensing in a commercial hot-desking environment. Hot-desking is a method of office resource management designed to reduce the real estate costs of professional practices. However, the shortcoming is often in the suitability and appropriateness of allocated work environments. The Internet of Things could produce new data sets in the office at a resolution, speed and validity of which that they could be factored into desk-allocation, distributing seats based on appropriate noise levels, stay length, equipment requirements, previous presence and proximity to others working on the same project, among many others. Design/methodology/approach The study utilises primary data from a commercial office environment in Central London (numerical building system data and semi-structured interviews) to feed a discrete events simulator. To test the hypothesis, the authors look at the potential for intelligent hot-desking to use “work type” data to improve the distribution of individuals in the office, increasing productivity through the creation of positive “work type environments” – where those working on specific tasks perform better when grouped with others doing the same task. The simulation runs for a typical work day, and the authors compare the intelligent hot-desking arrangement to a base case. Findings The study shows that sensor data can be used for desk allocation in a hot-desking environment utilising activity-based working, with results that outweigh the costs of occupancy detection. The authors are not only able to optimise desk utilisation based on quality occupancy data but also demonstrate how overall productivity increases as individuals are allocated desks of their preference as much as possible among other enabling optimisations that can be applied. Moreover, the authors explore how an increase in occupancy data collection in the private sector could have key advantages for the business as an organization and the city as a whole. Research limitations/implications The research explores only one possible incarnation of intelligent hot-desking, and the authors presume that all data have already been collected, and while not insurmountable, they do not discuss the technical or cultural difficulties to this end. Furthermore, final examination of the productivity benefit – because of the difficulty in defining and measuring the concept – is exploratory rather than definitive. This research suggests that not only human-centric smart building research should be prioritised over energy or space-based themes but also large-scale private sector collection of occupancy data may be imminent, and its potential should be examined. Practical implications Findings strongly suggest that the hot-desking may cost more in lost productivity than it gains in reduced rental costs and as such many commercial offices should revaluate the transition, particularly with a view to facilitate intelligent hot-desking. Companies should begin to think strategically about the wider benefits of collecting occupancy data across their real estate portfolio, rather than reviewing use cases in silos. Finally, cities should consider scenarios of widespread collection of occupancy data in the private sector, examining the value these data have to city systems such as transport, and how the city might procure it for these ends. Social implications This paper raises positive and negative social concerns. The value in occupancy data suggested herein, bringing with it the implication it should be collected en mass, has a noted concern that this brings privacy concerns. As such, policy and regulation should heed that current standards should be reviewed to ensure they are sufficient to protect those in offices from being unfairly discriminated, spied or exploited through occupancy data. However, the improved use of occupancy data improving workplaces could indeed make them more enjoyable places to work, and have the potential to become a staple in company’s corporate social responsibility policies. Originality/value This paper fulfils an identified need for better understanding the specific uses of occupancy data in the smart building mantra. Several sources suggest the current research focus on energy and rental costs is misguided when the holistic cost of an office is considered, and concepts related to staff – although less understood – may have an order of magnitude bigger impact. This research supports this hypothesis through the example of intelligent hot-desking. The value of this paper lies in redirecting industry and research towards the considering occupancy data in smart building uses cases including – but not limited to– intelligent hot-desking.

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