Abstract
In the current context of globalization, where firms are increasingly operating in networks of relationships with international subsidiaries, the relevance of their corporate governance has become evident. By the same token, the contribution to corporate governance of expatriates in these subsidiaries has become an important topic of discussion. The literature is not unanimous in recognizing the contribution of expatriates. However, the question as to whether the participation of expatriates in the management of international firms' subsidiaries is a critical success factor for their corporate governance has not been fully analyzed. This article presents the results of a study of a leading international firm -Vale -that investigated this question from a network perspective, with a view to narrowing this gap. The case study method was adopted and data collected from various sources documental investigation, structured questionnaires and interviews. The results suggested that expatriates can contribute to the success of corporate governance, especially through informal elements pertinent to social mechanisms of governance, such as commitment, communication, flexibility, trust and interdependence. The study thus provided insights for both managers of international firms and academics on corporate governance from a network perspective.
Highlights
In order to meet the increasing needs of customers and sustain a competitive advantage in the current context of globalization, international firms, in most sectors, are joining forces and operating in networks of relationships with other firms, including their own subsidiaries
This result is significant because it provides support for the assumption that what is at issue in the study is a strategic network and that the Vale parent company is viewed as having a strategic role in this network
Inasmuch as corporate governance was investigated as a construct of the network management dimension in the SNA model, and in the light of assumption A4, these results lent strong support to our first supposition (S1): the participation of expatriates in the management of Vale’s international subsidiaries can be a critical success factor for the corporate governance of the company’s network of relationships with these subsidiaries, to the extent that they contribute informal elements concerning the social mechanisms of corporate governance
Summary
In order to meet the increasing needs of customers and sustain a competitive advantage in the current context of globalization, international firms, in most sectors, are joining forces and operating in networks of relationships with other firms, including their own subsidiaries. Given the challenge and complexity of managing these networks (Strikwerda, 2003), the importance of corporate governance in the promotion of transparent and healthy international relationships has become evident. This has sparked a debate regarding the contribution of expatriate subsidiary managers to the corporate governance of international firms. The role of expatriates, especially where corporate governance is concerned, has not as yet been fully investigated or empirically tested (Minbaeva & Michailova, 2004; Riusala & Suutari, 2004)
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