Subsidiaries Of Multinational Companies Research Articles

Strategic Issue Selling by International Subsidiaries: The moderating role of the cultural distance

This study was to examine the moderation effect of cultural distance in the packaging and process of a strategic issue selling by a subsidiary of multinational company affects the attention dedicated by the headquarters. Data was collected via an online survey sent to the country managers of subsidiaries of multinational companies and responded by managers from 29 different countries and 46 different headquarter location, with that was possible to assess the cultural distance. The method used was structural equation modeling using Smart PLS 3.0. The results of this research show that as the effect of the issue selling strategy changes due to the cultural distance in the headquarter-subsidiary relationship, the greater the cultural distance, the less the effect of presenting organizational benefits on headquarter attention and, contrary to priori theory, the greater the cultural distance the lesser the effect of the consistency of values on the attention of the multinational company's headquarters. This research brings two contributions to the strategic issue analysis and the headquarters-subsidiaries relationship literatures. First, to provide additional empirical evidence regarding impact of issue framing on headquarters’ attention in MNC around the world; second, to expand the unresearched impact of the cultural distance like a moderation effect in headquarter-subsidiary relationship.

DETERMINANTS OF STANDARDIZATION AND LOCALIZATION OF HUMAN RESOURCE MANAGEMENT (HRM) PRACTICES IN MULTINATIONAL COMPANIES’ SUBSIDIARIES: A REVIEW AND IMPLICATIONS

Standardization and localization are two debatable concepts in human resource management of Multinational Companies (MNCs) subsidiaries. Standardization involves conducting subsidiaries HRM practices in similar ways as conducted at headquarters of Multinational Companies while localization is adaptation of subsidiaries HRM practices to ways used by local firms in the host countries of subsidiaries. The objective of this paper was to explore determinants associated with standardization and localization of HRM practices in Multinational Companies’ subsidiaries. Method used was a review of literature retrieved from Google, Google Scholar and Jstor as electronic data bases. Interpretation of findings from the literature showed that there were various determinants associated with standardization and localization of HRM practices in Multinational Companies’ subsidiaries and mostly included: cultural and institutional factors, country-of-origin dominance and HRM approaches adopted by Multinational Companies for overseas subsidiaries. It was concluded that the national contexts of the parent and host countries as reflected in the individual determinants had a huge role to play in standardization and localization of HRM practices such as staffing, training and development, compensation, communication, job design, promotion, recognition, job security, industrial relations, and performance management among MNCs’ subsidiaries. The paper also provided implications to international human resource management practitioners. KEY WORDS: HRM practices, Localization, Standardization, Subsidiaries

Dual embeddedness? Innovation capabilities, multinational subsidiaries, and solar power development in South Africa

One longstanding strand of research in the development studies literature has concerned itself with the development of innovation capabilities in developing-country firms. As most of this literature focuses on domestic firms, foreign-owned firms, such as subsidiaries of multinational companies (MNC), have received much less attention. In this paper, we address this knowledge gap by conducting an in-depth study exploring the learning and capability-building trajectory of a single MNC subsidiary operating in the market for solar power in South Africa. We employ a conceptual framework enabling us to explore capability building arising from the dual embeddedness of the subsidiary respectively in the corporate network of the parent company and the host economy in South Africa. We find that the subsidiary managed to achieve an advanced level of innovation capabilities in a short period. Initially, learning through interaction with the parent company and firm-internal learning in the subsidiary were found to have been essential in the early stage of the capability building process. Learning through collaboration with local research institutes became important only after a certain level of capabilities had already been acquired. Learning by hiring was important throughout, but it became gradually more important in parallel with the increasing specialisation of the local workforce in solar power projects. Our findings are particularly relevant for a new type of 'born global' MNCs that is becoming dominant in the global market for renewable energy. Finally, we point to the importance of regulatory conditions in shaping the degree of knowledge transfer and capability building of MNC subsidiaries.

PROFIT SHIFTING TO EUROPEAN TAX HAVENS: THE CASE OF SUBSIDIARIES OF MULTINATIONAL COMPANIES IN SERBIA

Due to the presence in a number of countries, multinational companies (MNCs) are in position to register a considerable part of pre-tax profit in countries with a preferential tax regime in order to avoid paying taxes at high rates. In other words, MNCs are able to shift profit from countries with a high tax burden to countries with low tax burden. In this paper, it is examined whether Serbian subsidiaries of MNCs, directly owned by European tax haven entities, more intensively shift profit to tax havens relative to other subsidiaries. A list of tax havens published by Oxfam in 2016 is used. Statistical tests and regression analysis showed that there is no significant difference in profit shifting to tax havens between two mentioned groups of subsidiaries. Therefore, it is possible that MNCs consider Serbia as a country with preferential tax regime due to relatively low statutory and effective corporate income tax rates. However, for the purposes of a detailed analysis, national tax authorities should insist on public disclosure of company tax reports to make tax practices of MNCs more transparent.

Factors Influencing the Extent of the Ethical Codes: Evidence from Slovakia

Even though formalization of ethical principles is a must in today’s business, research and evidence in the Slovak conditions remain scarce. Yet, creating an ethical business climate and especially the formalization of ethics through codes of ethics incorporated in corporate standards is a particularly interesting phenomenon in the conditions of transit economies due to the significant role of multinationals in this process. Therefore, the purpose of this study was to examine main factors influencing the extent of ethical codes in 225 subsidiaries of multinational companies operating in Slovakia. The conducted questionnaire study containing items focused on area and extent of ethical code, number of employees, economic performance, regional and industrial scope, ownership structure, and nationality of executive director was used as a tool for data collection. Factor analysis was processed to identify the interdependencies between observed variables and to find the latent variables. Further, the Kruskal–Wallis test was applied to identify the differences among the variables along with the Bonferroni correction test, which specified the items between which the significant difference occurred. The following findings emerged. First, companies with lower extent of ethical code use general phrases. When they want to specialize on any ethics problems, extent must be wider. Second, companies with a lower number of employees do not need extensive ethical code due to clear rules with which they are familiar in a direct way by owners. In multinational companies, the communication of ethical rules is realized via ethical codes with specific purposes because the direct way is impossible. Third, companies with foreign ownership used different managerial approaches, and therefore ethical codes differ in extent and content.

Selection and Development of Language Resources in Subsidiaries: The Case of Japanese MNCs in Asia

Although there have been conceptual and theoretical works that describe how multinational companies (MNCs) can leverage the multilingual environment, we still know little about how MNCs deal with language diversity in their foreign subsidiaries. To address the research gap, we conducted a qualitative case study with 83 subsidiaries of Japanese MNCs in 9 Asian countries as a preliminary investigation and 34 subsidiaries of Japanese NNCs in China as a more in-depth examination. We found that in the MNCs’ multilingual environment that includes parent language, local language, and English as the three main language options for the subsidiaries, the subsidiaries select their functional language based on the strategic and knowledge sourcing perspectives. The subsidiaries then mobilize and allocate managerial resources to develop distinctive language resources. Based on the findings, we developed a model that integrates strategy-oriented language selection and incremental development process of language resources in MNCs’ foreign subsidiaries. The findings and the proposed model support the view that language diversity in MNCs can be valuable resources and provide the deeper understanding about how MNCs’ foreign subsidiaries develop distinctive language resources tuning to their strategic mission and knowledge source.

Varieties of capitalism in multinational companies: A comparative study of Volkswagen Slovakia and Kia Motors Slovakia

This paper is about industrial relation (IR) strategies and practices in multinational companies (MNCs). It is based on a comparison of these practices in subsidiaries of different MNC within one country. We discuss how far differences and commonalities can be explained by national IR institutions, by company structures and cultures or by the agency of IR actors. In doing so, this will also address the broader question of how far the varieties of capitalism affect what MNCs do abroad and if, and in what way, they adapt to local conditions in terms of IRs and union structures. The paper is based on a case study comparison of two of the biggest automotive companies, Volkswagen and Hyundai, and their production locations in Slovakia. Both companies have different institutional backgrounds in their host countries with different patterns of labour relations, they are internationalized on a growing level and they both have foreign operations in identical countries like in Slovakia, which makes it possible to analyse the effects of institutions, strategies and labour agency by a comparison of establishments. There are two main findings exposing a strong interplay of the factors under scrutiny. First, in both companies, the local IR patterns are strongly shaped by the varieties of institutions at the company headquarters, whereas the IR institutions of the host country are adapted to them; and second, agency plays a growing role as the labour shortage improves the power position of the unions.

The value of international political connections: Evidence from Trump's 2016 surprise election

We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.

Institutional distance

The institutional environment in which multinational companies act is unique and complex. It is unique in the sense that the subsidiaries of multinational companies are facing dual pressures from both the host country and the country of the parent company. Further, the complexity of the environment presumes the need for global integration and the need for the local adaptation. Although some countries are characterized by a more favourable institutional environment for establishing and expanding business, in other countries the institutional environment is a challenge for multinational companies. In this paper, the author will present the current theoretical knowledge and references in already conducted research regarding the institutional distance in the context of multinational companies and their subsidiaries.

Institutional Distance: Construct of Isomorphism Relevant to Multinational Companies

The institutional environment in which multinational companies act is unique and complex. It is unique in the sense that the subsidiaries of multinational companies are facing dual pressures from both the host country and the country of the parent company. Further, the complexity of the environment presumes the need for global integration and the need for the local adaptation. Although some countries are characterized by a more favorable institutional environment for establishing and expanding business, in other countries the institutional environment is a challenge for multinational companies. In this paper, the author will present the current theoretical knowledge and references in already conducted research regarding the institutional distance in the context of multinational companies and its subsidiaries.

Multinationals and the evolving contours of their human management practices in Central and Eastern Europe and the former Soviet Union

PurposeWe explore the effects of three organizational variables (country of origin of the multinational company (MNC), the timing of entry into the European Union and the mode of establishment of the MNC subsidiary unit) on the human resource management (HRM) practices being pursued by subsidiaries of large MNCs operating in selected countries in Central and Eastern Europe (CEE) and the Former Soviet Union. Furthermore, we examine whether the degree of autonomy afforded to the subsidiary over its preferred HR recipes is related to overall local unit performance.Design/methodology/approachWe profile the HRM practices of 379 foreign owned subsidiaries located in Bulgaria, Croatia, The Czech Republic, Kazakhstan, Poland, Hungary, Russia, Romania, Serbia and Slovakia. Using descriptive statistics, we present the general characteristics of the sample and we then use bivariate statistical analysis to test our hypotheses relating to the impact of different organizational factors on the HR practice mix implemented in the MNC subsidiaries covered in our survey.FindingsWe find a significant correlation between the annual training budget, the importance of knowledge flow from headquarters (HQs) to the subsidiary and the perceived criticality of training and development and whether the subsidiary is a greenfield site or an acquisition. A correlation was also found between the national timing of EU membership (older members, newer and then candidate countries and non-EU members) and three HR practice variables: the use of expatriates, external service providers and employee relations practices.Research limitations/implicationsOur research calls attention to the issue of balancing the efficiencies of standardization with the local preferences and traditions of customization which results in more successful MNC control and ultimately higher levels of performance. It also calls attention to the challenges in pursuing research of this nature over time in the CEE region, especially given the dynamic nature of the MNC mix in each of the countries.Practical implicationsOur findings serve to reduce the information gap on foreign-owned companies in CEE and the Former Soviet Union.Originality/valueDespite some 30 years of transition, there remains a paucity of empirical research on the HR practices of MNCs across a number of countries in the CEE region. For a decade and a half, the CEEIRT group[1] has been systematically gathering empirical evidence. The combination of the breadth (10 countries) and depth (numerous items related to MNC subsidiary relationships with corporate HQs and patterns of HR practices and roles) characterizing the ongoing research effort of the CEEIRT collaboration serves as a mechanism for augmenting the empirical base on HRM in the region.

The Value of International Political Connections: Evidence from Trump's 2016 Surprise Election

We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.

When Local Meets Global: How Introducing English Destabilizes Translanguaging Practices in a Cross-Border Organization

Drawing on an interdisciplinary approach combining linguistics and International Business, we suggest that global and local dynamics interact to co-construct specific language practices in an MNC subsidiary situated in a cross-border territory. We show how introducing a foreign language can modify the benefits that these local multilingual practices generate. Employees revert to translanguaging: They combine all their language knowledge, French, German and local vernacular, to make themselves understood. These specific local language practices have an inclusive role that enables low-level employees in the hierarchy to play a linking role between the multinational company subsidiary and its headquarters in Germany.

Customer-driven supply chains: Trends and practices in leading Italian companies

This paper aims at understanding whether and to what extent companies are facing the challenge of improving their supply chains according to a customer-driven approach. Although the most recent supply chain management literature developed theoretical reflections and conceptualizations on the need for customer centricity in supply chain management, companies' practice does not seem to follow these prescriptions and the empirical research highlighted a frequent misalignment between market strategy and supply chain management processes. The aim of this paper is to bridge these two perspectives by answering two research questions. First, how are companies revising their supply chains, that is, what is the nature of the most recent projects concerning supply chain improvements? Second, to what extent are companies that invest in such projects prioritizing those specific projects that make a concrete alignment between market orientation and supply chain operating conditions possible? The paper reports and discusses the findings of an empirical investigation conducted among leading Italian companies or Italian subsidiaries of multinational companies. In particular, a two-step research was conducted, consisting of ten indepth interviews and a survey. According to our study, Italian companies are revising their supply chains to provide prompt availability of the product in different (but coordinated) distribution channels. This led to the launch of projects related to Demand Forecasting and to Omnichannel strategy adoption. However, in most cases, the managerial and technological readiness of companies is not in line with the relevance of the challenges. Another area of improvement concerns projects aimed at adopting up-to-date technologies, mostly connected to the Industry 4.0 paradigm, to improve operational performance. In this case the major opportunities perceived by the companies relate to the adoption of Big Data Analytics in order to better understand market trends

THE RELATION BETWEEN MULTINATIONAL COMPANIES AND THE REPUBLIC OF SERBIA: INCOME TAXATION CONTEXT

Host countries, especially developing countries, often grant tax incentives in order to attract foreign capital of multinational companies (MNCs), expecting positive effects of foreign direct investments on their economic development. Also, there is an opinion dominant in the literature that MNCs have enough power to achieve considerable tax incentives in negotiations with host country. Considering that one MNC was granted considerable tax incentives from the Republic of Serbia (RS), the paper examines whether subsidiaries of MNCs have more favorable tax treatment of recorded income than domestic companies in the RS. Statistical analysis outcomes show that subsidiaries of MNCs do not have significantly lower income tax burden than domestic companies suggesting that tax incentives granted to MNCs from the RS are an exception rather than a rule. In addition, research showed that subsidiaries of MNCs primarily use tax incentives that are equally available to domestic companies, such as tax incentives for investment in fixed assets. Research results are robust to changes of income tax burden measures.

A Model of the Configuration Process of HR Systems within Multinational Subsidiaries in Indonesia

This article develops an empirical model of the process through which human resource management (henceforth HR) systems within subsidiaries of multinational companies (MNCs) are constructed. It extends current models that had previously been developed. It is a second-order analysis that integrates research findings that had been previously published along with unpublished materials from the same research project. The research project applied different qualitative methods in data collection. Complementing a previous conceptual macro model of the configuration process of HR systems, this article adds on a micro-empirical model of the process. The model proposes that the adoption and enactment of new HR ideas that make up HR systems is initiated by the reconceptualization of corporate identity and facilitated by the connectivity of relevant HR actors that enables the flows of ideas from the outside into the firms. Five research propositions are finally proposed to be tested as a contribution for future research.

Allocating common costs of multinational companies based on arm's length principle and Nash non-cooperative game

Allocating common costs among the subsidiaries of multinational companies (MNCs) is widely conducted in practice. It is of paramount importance that optimal allocation plans can be developed. In this study, we propose an allocation method based on the arm's length principle (ALP), which is well accepted for the internal transactions between MNCs and subsidiaries. Unlike the available studies addressing efficiencies, this study considers profits in common cost allocation. We first deduce a general mathematical expression of the ALP for common cost allocation. Based on it, allocation models are developed, aiming to maximize the profits of both MNCs and subsidiaries. We further develop a solution approach including an algorithm based on the Nash non-cooperative game theory. We prove several interesting characteristics of the algorithm, including (i) the algorithm is convergent, (ii) the optimal solution is a Nash equilibrium and unique, and iii) the optimal solution is not affected by any initial allocation plan. The results of a case application highlight the applicability of our allocation method and solution approach. Through the study, we obtain several important practical insights, including (i) both the ALP and cooperate tax rates affect MNCs’ profit maximization, and (ii) subsidiaries’ profit maximization is affected by the ALP only.

Innovation capability building in subsidiaries of multinational companies in emerging economies: Insights from the wind turbine industry

Abstract Research on the catching up of latecomer firms has generally overlooked whether, and how, subsidiaries of multinational companies (MNC) operating in emerging economies have developed innovation capabilities. Existing research on innovation capability building in MNC subsidiaries mainly employs quantitative research designs, comprising large samples of MNC subsidiaries using patent statistics to generate insights at a highly aggregated level of analyses. Accordingly, the existing research fails to capture the micro-level dynamics of learning and innovation capability development over time within individual MNC subsidiaries. To overcome this knowledge gap, we pursue a case study approach in this paper, drawing on qualitative data in order to generate an in-depth analysis of the processes underlying innovation capability building within a single MNC subsidiary. We examine the innovation capability development trajectory of a local Indian subsidiary of a Danish first-tier supplier of wind turbine blades. We adopt an analytical framework based on the literature on innovation capability building in latecomer firms, which is combined with insights from the literature on MNC subsidiary capability evolution. The paper points to the key role of the parent company and internal learning in the subsidiary as the basis for the advanced level of innovation capabilities achieved by the subsidiary, enabling it to become a supplier of innovations to its parent company. Contributions to the literature on innovation capability building in latecomer firms are presented and discussed.

EFEKTIFITAS PENERAPAN STRATEGI MANAJEMEN ACCOUNTING DAN STRATEGI BAURAN PEMASARAN DALAM MENINGKATKAN PANGSA PASAR DAN PROFITABILITAS (STUDI KASUS PT ARNOTT’S INDONESIA)

Asia crisis in 1997 in 1997 infected many countries arround Asia, and many companies had to have an excelent corporate strategies in order for them to be survived in that tough situation. Those strategies should be continues strategies, which represented all value chain activities both primiry and supporting activities activities within the company. Than that value chain will be a competitive advantage and key success factor for the company because it is a blend of excellent strategies, which has an objective to achieve company goal and to be survived in crisis or in hard situation. PT Arnott Indonesia as subsidiary of multi national company, which is Arnott’s Australian Ltd, the pressure to be survived in biscuit industry is enormous. Thus, the company needs to have excellent strategies in each value chain activities and combine all those strategies into one corporate strategy that can be used to compete with all competitors within rhe biscuit industry. Management accounting and marketing strategies should be integrated and supported onewith each other.In additio,it has to be an activity that controlled all primary activities within Arnott’s Indonesia value chain. In conclusion this article isdisscussed about the role of management acoounting in PT arnott’s Indonesia in supporting company objectives and goals particulary activities thar are related with the marketing

Editorial Revista Ciencias Administrativas N° 14

La publicación del Número 14 de la Revista Ciencias Administrativas correspondiente al periodo enero - julio de 2019 constituye un motivo de satisfacción para los editores pero especialmente para los autores que, con la publicación de sus trabajos, ven culminado su esfuerzo. La presente edición incluye nueve artículos provenientes de la Argentina, Colombia, Ecuador, México y Perú.
 Se han seleccionado cinco artículos científicos: “Un tablero de comando para el sector de la construcción de la provincia de la Pampa: variables relevantes para la toma de decisiones”, “Diseño de un proyecto de emprendimiento con población vulnerable: caso, jardín infantil de Bogotá”, “Stakeholders de los establecimientos hoteleros de las zonas especiales turísticas de Quito”, “Pagos por rendimiento en las filiales argentinas de empresas multinacionales” y “El ciclo de vida del posicionamiento y el choque de las generaciones en el mercado del siglo XXI”
 Completan la edición cuatro ensayos: “Determinación de límites presupuestarios para la administración de bienes públicos por la aplicación del método de costos de viaje”, “Emociones y decisiones en la empresa familiar: una propuesta de análisis fenomenológico interpretativo”, “Las múltiples identidades organizacionales en Textiles Pigüé. Recuperada, cooperativa, eficiente y social” y “La revisión bibliográfica en el doctorado en Administración”.
 Finalmente queremos compartir que durante el año 2018 la revista ha sido incluida en las bases de datos PKP Index, EBSCO y MIAR - Matriz de Información para el Análisis de Revistas con lo cual nuestra publicación figura en siete Bases de Datos y en cuatro Repositorios/Directorios. 
 Los logros obtenidos deben ser compartidos con el equipo editorial, con los autores que nos confían sus trabajos, con los evaluadores que participan del proceso de revisión y, en particular, con los lectores que tienen la última palabra.
 El Comité Ejecutivo