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Parental control: A study of U.S. subsidiaries in Mexico

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  • Lovett, Steven Russell
  • Pérez-Nordtvedt, Liliana
  • Rasheed, Abdul A.

Abstract

This study develops a framework that suggests that subsidiary characteristics, such as performance, purpose and manager nationality affect the extent of control and mechanisms of control (i.e., results, cultural and action controls) that their parent companies exercise over them. Hypotheses were tested using survey responses from 44 Mexican subsidiary--U.S. parent dyads. As expected, results suggest that parental perceptions of subsidiary performance are inversely related to the extent of control that parent companies exercise over these subsidiaries. It was also found that subsidiaries established for purposes relating to a knowledge seeking motivation tended to be subject to more cultural control, but no support was found for the hypothesized relationships between market purpose and results control, and resource purpose and action control. Finally, also as predicted, Mexican managers tended to be subject to greater action control by their U.S. parent than American managers.

Suggested Citation

  • Lovett, Steven Russell & Pérez-Nordtvedt, Liliana & Rasheed, Abdul A., 2009. "Parental control: A study of U.S. subsidiaries in Mexico," International Business Review, Elsevier, vol. 18(5), pages 481-493, October.
  • Handle: RePEc:eee:iburev:v:18:y:2009:i:5:p:481-493
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    References listed on IDEAS

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    Cited by:

    1. Moore, Fiona, 2012. "Identity, knowledge and strategy in the UK subsidiary of an Anglo-German automobile manufacturer," International Business Review, Elsevier, pages 281-292.
    2. Gammelgaard, Jens & McDonald, Frank & Stephan, Andreas & Tüselmann, Heinz & Dörrenbächer, Christoph, 2012. "The impact of increases in subsidiary autonomy and network relationships on performance," International Business Review, Elsevier, pages 1158-1172.
    3. Kawai, Norifumi & Strange, Roger, 2014. "Subsidiary autonomy and performance in Japanese multinationals in Europe," International Business Review, Elsevier, pages 504-515.

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