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Control mechanisms of their subsidiaries by multinational firms: A multidimensional perspective

  • Jaussaud, Jacques
  • Schaaper, Johannes
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    Multinational companies use a wide range of mechanisms to keep control over a subsidiary abroad such as the share of capital in the case of international joint ventures, expatriation, active participation in the board of directors, staffing key management positions, training and socialization of employees, technology transfer, and so on. However, only a few empirical studies on the control of international subsidiaries embrace all these dimensions simultaneously and show how they interact. This paper presents the empirical results of a quantitative survey of 316 subsidiaries, international joint ventures and wholly foreign owned enterprises, set up in China by European and Japanese multinationals. The main objective of the survey is to bring out an inductive multidimensional model of control, and to allow a better understanding of complex interaction and balance between the instruments of control of a subsidiary abroad.

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    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 12 (2006)
    Issue (Month): 1 (March)
    Pages: 23-45

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    Handle: RePEc:eee:intman:v:12:y:2006:i:1:p:23-45
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    1. Zhao, Hongxin & Zhu, Gangti, 1998. "Determinants of ownership preference of international joint ventures: new evidence from Chinese manufacturing industries," International Business Review, Elsevier, vol. 7(6), pages 569-589, November.
    2. J Michael Geringer & Louis Hebert, 1989. "Control and Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 20(2), pages 235-254, June.
    3. Lee, Ji-Ren & Chen, Wei-Ru & Kao, Charng, 1998. "Bargaining power and the trade-off between the ownership and control of international joint ventures in China," Journal of International Management, Elsevier, vol. 4(4), pages 353-385, December.
    4. Jon I Martinez & J Carlos Jarillo, 1989. "The Evolution of Research on Coordination Mechanisms in Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan, vol. 20(3), pages 489-514, September.
    5. Aimin Yan, 2001. "Antecedents and Effects of Parent Control in International Joint Ventures," Journal of Management Studies, Wiley Blackwell, vol. 38(3), pages 393-416, 05.
    6. Groot, Tom L. C. M. & Merchant, Kenneth A., 2000. "Control of international joint ventures," Accounting, Organizations and Society, Elsevier, vol. 25(6), pages 579-607, August.
    7. Zhang, Yan & Li, Haiyang, 2001. "The control design and performance in international joint ventures: a dynamic evolution perspective," International Business Review, Elsevier, vol. 10(3), pages 341-362, June.
    8. Luo, Yadong, 2001. "Equity sharing in international joint ventures: an empirical analysis of strategic and environmental determinants," Journal of International Management, Elsevier, vol. 7(1), pages 31-58.
    9. Jon I Martinez & J Carlos Jarillo, 1991. "Coordination Demands of International Strategies," Journal of International Business Studies, Palgrave Macmillan, vol. 22(3), pages 429-444, September.
    10. Child, John & Yan, Yanni, 1999. "Investment and control in international joint ventures: the case of China," Journal of World Business, Elsevier, vol. 34(1), pages 3-15, April.
    11. Yadong Luo & Oded Shenkar & Mee-Kau Nyaw, 2001. "A Dual Parent Perspective on Control and Performance in International Joint Ventures: Lessons From a Developing Economy," Journal of International Business Studies, Palgrave Macmillan, vol. 32(1), pages 41-58, March.
    12. Jean-François Hennart, 1991. "The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States," Management Science, INFORMS, vol. 37(4), pages 483-497, April.
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