Management Control in Central and Eastern European Subsidiaries

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ISBN: 9780230201408 | 0230201407
Cover: Hardcover
Copyright: 12/15/2008

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How can Multinational Corporations effectively manage and control their subsidiaries in transition countries? This empirical study on 40 MNCs operating in Central and Eastern Europe provides insights onto how the transition context and the culture of the region impact the choice and effectiveness of Headquarters control in subsidiaries.

List of Figures	p. ix
List of Tables	p. xi
List of Abbreviations	p. xiii
Introduction: Problem, Relevance and Research Question	p. 1
The Concept of Management Control	p. 6
Defining 'management control'	p. 6
The fundamentals of management control	p. 10
Classification of control mechanisms	p. 14
Formal vs. informal control	p. 15
Output control vs. behavior control	p. 16
Market, bureaucracy and clan controls	p. 17
Bureaucratic control vs. cultural control	p. 18
Result control vs. personnel/cultural control	p. 19
Personal and impersonal vs. planned and unplanned	p. 20
A synthesis of control mechanisms	p. 21
Control mechanisms used by this study	p. 24
Management control in multinational corporations	p. 29
Strategy determines organizational design and type of control	p. 30
Synthesis: strategy, control mechanisms and control extent	p. 33
Literature Review of Current Studies on Management Control in MNCs	p. 39
Factors influencing management control	p. 41
Environmental context	p. 42
Uncertainty	p. 46
Heterogeneity/complexity/institutional framework	p. 46
Economic and technological imperatives	p. 48
Organizational context	p. 49
Age	p. 49
Subsidiary size	p. 49
Ownership and resource provision	p. 50
Culture	p. 52
Country of origin effect	p. 66
Moderators	p. 69
Expatriates	p. 70
The role of trust	p. 72
International experience of organizational units	p. 74
Organization culture	p. 74
Personality traits	p. 75
Interaction of strategy, power and interdependence	p. 76
MNC strategy	p. 76
Interdependence	p. 77
Power	p. 78
Discussion	p. 78
A comprehensive model of management control fit	p. 81
Cultural Research on Central and Eastern Europe	p. 85
The aftermath of communism	p. 91
Method	p. 92
Semi-structured interview	p. 94
Potential sources of bias and ways of dealing with it	p. 97
Qualitative content analysis	p. 101
Validity and reliability	p. 104
Validity and reliability check in the present study	p. 105
Rationale for chosen methodology	p. 105
Sample	p. 108
Empirical Results: Western Management Control in CEE	p. 115
Strategic choice: market entry strategy	p. 115
Motives for market entry	p. 115
Growth potential	p. 116
Early birds and first movers	p. 116
Market entry mode	p. 117
Management control types in MNC headquarters	p. 119
Explicit MNC control	p. 120
Extent of centralization	p. 120
Extent of standardization	p. 124
Extent of formalization	p. 129
Extent of output & performance control	p. 130
Extent of expatriate control	p. 135
Reasons for using Host-Country Nationals (HCN)	p. 145
Implicit MNC control	p. 149
Control by lateral relations	p. 150
Control by informal communication and personal intra-group networks	p. 154
Control by international management training	p. 157
Control by organizational culture	p. 163
Communication HQ-subsidiary	p. 167
Intensity of communication	p. 167
Group language	p. 168
Communication functions	p. 168
Conclusion: extent and types of control classified	p. 168
Frequency of control types	p. 168
Combinations of control types	p. 169
Control extent: operational versus strategic control	p. 173
Contingencies: the political and economic framework in CEE	p. 174
Political risk	p. 176
Political instability	p. 176
Bureaucracy	p. 177
Corruption	p. 178
Legal constraints	p. 179
Summary political risk	p. 179
Economic and firm level risk	p. 179
Risk of concealment of relevant information	p. 179
Development stage (maturity) and poor data quality	p. 182
Lack of understanding for Western management concepts and control	p. 184
Qualified personnel	p. 185
Summary of economic and firm level risk	p. 185
Culture	p. 188
Some CEE-wide parallels in cultural perceptions based on communism	p. 189
Moderators	p. 209
Moderators on the organizational level	p. 209
Moderators on the individual level	p. 228
Propositions and managerial implications	p. 232
Major Findings	p. 236
Conclusion: cultural differences, contingencies, moderators and management control in MNCs	p. 236
Directions for future research	p. 239
Discussion	p. 240
Managerial implications	p. 242
Determinants of effective management control and business success in CEE	p. 242
Managerial implications of perceived cultural differences	p. 246
Strategic success factors for implementing management control	p. 246
Implementation challenges	p. 246
Implementation mediators	p. 253
Summary	p. 262
Key findings on a glimpse	p. 262
Summary	p. 265
Culture, contingencies and MNC management control in CEE	p. 267
Culture	p. 268
Contingencies	p. 268
Moderators	p. 269
Conclusion	p. 269
The management challenge	p. 270
Appendix	p. 271
Bibliography	p. 276
Index	p. 303
Table of Contents provided by Ingram. All Rights Reserved.

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Management Control in Central and Eastern European Subsidiaries

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