Subsidiaries Of MNCs Research Articles

Benefitsand Costs of European Works Councils in Greece: A Balkan Way of Social Dialogue

As reported in similar studies, the necessity for social cohesion and workers motivation had as a result the adoption of EU 94/45/EC on European Works Councils (EWCs). This fact has been the cornerstone of the venture to establish a social dimension of the European Union, since it gives employees the right to information and consultation as part of the effort to develop a socially responsible transnational management. This paper includes several results of a conducted research on the introduction and functioning of European Works Councils in a Balkan industrial relations system. The research concentrated on the oil/lubricants and food/beverage sectors. More specifically, the scope of the research was to test the hypothesis that EWCs create added value (positive or negative) in industrial relations within subsidiaries of MNCs in Greece and to explore the determining factors of that fact, using a qualitative approach in a combination of several case studies and interviews with representatives of the parties concerned. The research findings indicate that on the one hand EWCs contribute to the creation of positive added value (benefits) to those companies and on the other hand the negative added value (costs) is very limited. Furthermore, this paper searches the contributing factors to the EWCs added value such as internationalisation of the company, trade union structure, previous experience on workers participation schemes etc. The paper concludes that EWCs are more effective in internationalised corporations, which face the challenge of more concentrated industrial relations at a transnational level (Euro-companies) than in other enterprises, which adopt a more decentralised and national-oriented industrial relations model. Moreover, according to the research findings, whereas the European trade unions have acted for several years as pressure groups for the adoption of EWC directive, the MNCs meet the most important benefits by the EWCs function.

Corporate Governance and Disclosure Practices in India: MNC Subsidiaries versus Domestic Cross-Listed Firms

This research intend to investigate empirically whether MNC subsidiaries have better corporate governance and disclosure policies compared to domestic cross-listed firms from the Indian perspectives. Using firms across different sectors listed in Bombay Stock Exchange (BSE), this research aims to analyze difference in corporate governance and disclosure practices among firms owned by foreign owner (MNC subsidiaries) and local owner (domestic cross-listed firms). This study focuses on this direction and aims to analyze difference in corporate governance and disclosure practices among MNC subsidiaries and cross-listed firms as well as cross-listing in US versus Europe. This research indicates that subsidiaries of MNCs and cross-listed firms have statistical significant difference in corporate governance and disclosure practices. The study also found that due to different institutional and legal requirements, the domestic cross-listed firms disclose more information than MNCs subsidiaries listed only in host country.

Technological Innovation Strategy: A Case Study in Brazilian Subsidiaries of MNCs

This article analyzes the process of technology strategy formulation in two cases of Brazilian subsidiaries from telecom industry. One company belongs to the equipment layer (EQUIPCOMPANY), and the other to the network layer (NETCOMPANY). In EQUIPCOMPANY, technology strategy and corporate strategy are formulated in conjunction, and the subsidiary is involved in the creation of global products. The main advantage of this approach is the alignment around a common vision and the synergy created among subsidiaries. However, the subsidiaries’ autonomy to create innovations highly adapted to a specific country is limited. In NETCOMPANY, the technology strategy derives from the marketing vision of the future, and the Brazilian subsidiary can define its own strategy, merely requesting parent company approval for implementation. This approach brings agility to decision making and allows its subsidiaries to create innovations highly adapted to local specific needs. Nevertheless, NETCOMPANY faces poor coordination among subsidiaries, possible duplication of work and investment, and a lack of synergy and collaboration on innovation projects.

Revisiting the Firm Ownership and Performance Debate in an Emerging Economy during Economic Reforms

Neoliberal scholars have attributed the inefficiency of state owned enterprises (SOEs) on ineffective monitoring arrangements in weak institutional environments and predicted their ultimate demise. But continued and significant presence of SOEs in emerging economies like India, even after two decades of economic reforms has provoked us to revisit the ownership performance debate. We study the effect of ownership and reforms on the performance of the entire population of firms in India over a twenty year period. Since, India has significant presence of business group affiliated firms and subsidiaries of MNCs and business groups tend to create internal markets and MNCs resort to internalization to compensate for the weak institutional environment, we have adopted finer grained classification of privately owned firms. We find that the state owned enterprises have not only turned around but have been outperforming firms from other ownership categories on certain parameters. We argue that firms in an emerging economy like India do not suffer from a lack of monitoring arrangements because of the so called ‘weak institutional environment’. It is likely that the institutions that are more relevant and influential in this context are rooted in the social structures, and perhaps not so much the traditional legal and economic institutions prevalent in developed economies. Hence the reform process has merely helped in opening up more opportunities for some categories of firms, thereby impacting performance.

MNC knowledge transfer, subsidiary absorptive capacity and HRM

Based on a sample of 169 subsidiaries of MNCs operating in USA, Russia, and China, this paper investigates the relationship between MNC subsidiary HRM practices, absorptive capacity and knowledge transfer. The paper makes two key contributions. First, the paper examines the relationship between the application of specific HRM practices and the level of the absorptive capacity. Second, the paper suggests that absorptive capacity should be conceptualized as being comprised of two dimensions—ability and motivation. Further, results indicate that the interaction of ability and motivation (absorptive capacity) significantly facilitate transfer of knowledge from other parts of the MNC.

Building Radical Innovation Capabilities in Emerging Market Subsidiaries: The Case of Intel India

The paper explores the processes that lead to new capability development in emerging market subsidiaries of MNCs. The capability in question is that of bringing about radical innovation in a reliable and repeatable manner. In this exploratory research, we study the radical innovation capability building process at Intel India using the Charter- Competence co- evolution model proposed by Birkinshaw and Hood (1988). The inferences we offer are, firstly, capability evolution process adopts multiple, intertwined pathways which are shaped by choices and actions of the head-office and subsidiary. Secondly, a subsidiary’s local embeddedness leads to newer insights, but the global connectedness renders the necessary legitimacy and head- office attention for executing such insights. Finally, a pre- requisite for a radical innovation capability is a subsidiary’s initiative in setting up an incremental program that offers a run rate of ideas to build on, and that such a capability can’t be imported from the parent organization.

Control over Employment Practice in Multinationals: Subsidiary Functions, Corporate Structures, and National Systems

The authors use comparable data on employment practices in multinationals located in four countries—Canada, Ireland, Spain, and the United Kingdom—to examine the question, How can we explain variation among national subsidiaries of MNCs in the extent and form of control on employment matters? In accounting for variation in both output and social control, the authors explore three potential influences: the functions of the national subsidiaries within the wider companies; the role of host country constraints; and the structures of the multinational, including the HR function. They examine the effect of each set of factors in the presence of the others, something that previous research has been unable to do, and show that each is a significant influence. Their study breaks new ground by investigating the functions of subsidiaries and the link with control.

Focus: Workers' victory at DHL Turkey

Page 8 Volume 20 Issue 4 2013 INTERNATIONAL union rights FOCUS ❐ RECOGNITION AND BARGAINING SYSTEMS to the minimum wage, now 978 Turkish Lira (approx. 350 euro) per month, which is considered significantly below an adequate living wage. December 2012: New labour legislation but still the old authoritarianism Under pressure from the European Union and International Labour Organisation, the AKP government enacted the Law of Trade Unions and Collective Agreements in December 2012. But the new legislation – shaped in large part by the principal employer organisations – offers few genuine protections for workers seeking to form unions. Indeed, in certain key respects – bargaining rights for new unions, penalties for unlawful management practices, and additional restrictions on strikes – the new law may be worse than the 1983 legislation it has replaced. In the area of bargaining rights, the sector threshold for unions has been reduced from 10 percent to 3 percent, but the number of sectors has also been reduced and their size increased, and thus for some new unions, the 3 percent threshold may actually be more difficult to achieve than the old 10 percent threshold. The law reduces the already weak financial penalties for unlawful terminations for employees at small and medium sized enterprises and for employees with less than six months seniority, who together constitute about one half of the Turkish labour force. Thus, contrary to the hopes of international organisations, the new law continues the old tradition of authoritarianism and does little to strengthen fundamental labour rights and freedoms. It will provide few additional protections for workers seeking to organise at the Turkish subsidiaries of European-based MNCs. Employer anti-unionism is endemic In the private sector, the situation facing independent unions is dire. Employer violations of workers’ rights are endemic. Both Turkish and foreign-owned companies routinely harass and intimidate workers who try to form unions. They fire union activists, retaliate against union members in the workplace, pressure workers to resign from the union and interfere with the free choice of non-union workers. Employers form ‘yellow unions’ and pressure workers to join them. While unlawful, these tactics usually go completely unpunished. The penalties against unfair dismissals, for example, are weak and do not act as a deterrent against unlawful behaviour. Labour courts often order Turkish employers to reinstate workers, but they can choose instead to avoid reinstatement by paying a minimal amount of compensation. Union members are often denied promotions and pay Workers’ Victory at DHL Turkey Both Turkish and foreign-owned companies routinely harass and intimidate workers who try to form unions JOHN LOGAN is Professor and Director of Labor and Employment Studies at San Francisco State University and a senior research fellow at the University of CaliforniaBerkeley Labor Center In 2012 and 2013, he wrote two reports on DP-DHL’s labour practices in Turkey T he anti-government protests in Istanbul, Ankara, and other Turkish cities in June 2012 brought international attention to the authoritarian tendencies of Prime Minister Erdo an’s Justice and Development Party (‘AKP’) government . Since first winning power in 2002, the Erdo an government has also exercised significant repression in the area of labour rights. It has limited workers’ rights to organise and strike, and has allowed companies to violate workers’ rights with virtual impunity. As a result, Turkey has become the ‘de-unionisation champion of the OECD’. But even in the face of this repression, Turkish workers won union recognition and collective bargaining at DHL Turkey in October 2013. Repression of workers’ rights has been the norm in modern Turkey Turkey has repeatedly restricted labour rights in recent times. Indeed, with the exception of brief periods in the 1960s and 1970s, the systematic repression of independent unions has been a constant theme in the 100-year history of the Turkish Republic. Repression of unions and strikes followed the military coups of 1960, 1971, and 1980, and even after the return to civilian rule, the government placed significant restrictions on the right to organise. Under 1983 legislation, which stayed in place for almost three decades, unions were required to win majority support at the workplace and demonstrate that they represented at least 10 percent of all the workers in their...

Mergers and Acquisitions as a Strategic Tool to Gain Competitive Advantage by Exploiting Synergies: A Study of Merging & Non Merging Firms in Indian Aluminium Industry

Mergers and acquisitions (M&As) are strategic decisions taken for maximization of a company's growth by enhancing its production and marketing operations. They are being used to gain strength, expand the customer base, cut competition or enter into a new market or product segment. When globalization of the Indian economy was started in 1991, it was believed that it would mean foreigners not only doing business in India but also taking over Indian companies. However, integrating the Indian economy with rest of the world has proved to be a two-way experience. Presently, Indian companies are not only doing business abroad but there are many instances of their taking over foreign companies with a very significant value which shows the vision strategy and dominance of Indian corporates in the global market.In post-liberalization era, Indian corporate sector has experienced a boom in M&As led restructuring strategies, mainly due to the presence of subsidiaries of big MNCs here as well as the pressure recorded by such strategies on the domestic firms. Finance, Aluminium, Drugs & Pharmaceutical, Telecommunication, Textiles, Electrical machinery, Tea etc are the major sectors in which it has been occurred. Out of these, Indian market for aluminium is booming continuously. The Indian aluminium industry has one of the highest growth rates in the world at over 7% per annum. This paper tries to analysis the objectives, benefits, and trends of M&As in post liberalization period in India. An attempt has been made to analyze the performance of merging (HINDALCO) and non-merging firm (NALCO) in the Indian Aluminium industry using various profitability measures. For carrying out analysis work, financial data of selected companies is collected from Annual Statements of selected companies, CMIE Prowess and Capital Market Online Data Bank.

How Buyer-Seller Relationship Quality Influences Adaptation and Innovation by Foreign MNCs’ Subsidiaries

Based on embeddedness theory and transaction cost theory, this study explores the influences of innovation and adaptation, which benefit from relationship quality between the subsidiaries of foreign MNC and their local suppliers, on the corporate performance of foreign subsidiaries. In order to examine the hypothetic relationships, 104 subsidiaries of foreign MNCs operating in Taiwan were surveyed. The results indicate that the relationship quality, including social capital, information exchange, and frequency of contact, have positive impacts on innovation and adaptation. Additionally, innovation and adaptation function as the mediating mechanism delivering the beneficial influences of relationship quality to the foreign subsidiary's performance. These results imply that the foreign subsidiaries not only devote their resources to innovation for their own interest, but also adjust themselves and invest in the relationships with local suppliers.

Managing the transition to electric mobility in Chinese automotive subsidiaries of MNCs

With the transition to electric mobility, foreign manufacturers and suppliers want to defend or even expand their previously high market shares despite increasing Chinese competition and want to continue to tap Chinese market opportunities. This article examines the challenges for the Chinese subsidiaries of multinational automotive companies in the transition to electric mobility. These consist of being unable to serve the largest market in the world adequately, failing to test the new technology adequately, being unable to raise the resources needed to finance electric mobility and being unable to handle the divergent management logics of the old and new drive technologies properly. To carry out the study, structured interviews with experts in China were conducted alongside the theoretical deduction of hypotheses in 2010.

An Exploration Of The Impact Of Strategic International Human Resource Management On Firm Performance: The Case Of Foreign MNCs In China

The intense competition arising from globalization not only demands MNCs to seek low cost, innovation, speed and adaptability, but also brings the need to manage their human resources globally and strategically so that it becomes a source of sustained competitive advantage. It has thus led to the evolution of strategic international human resource management (SIHRM) in the literature, which not only acknowledges the need of balancing global integration and local responsiveness, but also emphasises the importance of seeking strategic fit between HR policies and business strategy, in turn leading to a superior business performance. Although it has been widely accepted that HR policies make a direct and positive impact on firm performance, the researcher believes there appears to be limited research undertaken in the context of the developing world. Hence this paper focus upon the case of China with reference to foreign MNCs operations and the challenges faced from the dual pressure of balancing globalisation and localisation. Consequently, the researcher selected a case study approach with a triangulation data collection method. Specifically, a two-stage primary data collection process of questionnaires and semi-structured interviews were undertaken in four selected subsidiaries of MNCs in China. Thereafter, a series of statistical process was conducted, i.e. frequency analysis, reliability analysis, correlation and regression tests along with the transcripts from the rich data set of interviews. The finding of this research strengthened the mainstream literature where there is a direct and positive relationship between HR polices and firm performance. Furthermore, this research also reinforced a number of views from previous studies on the importance of aligning HR policies with business strategy to attain strategic integration and thus the achievement of firm performance. However, in contrast to previous studies this research found the quality enhancement of products and service was the preferred and currently adopted business strategy amongst the studied foreign MNCs Chinese subsidiaries, whereas the traditional view regards cost reduction as contributing to the competitive edge in China. Moreover, this research also discovered that although headquarters initially transferred their standardised HR policies and procedures to Chinese subsidiaries, they subsequently delegated authority to subsidiaries. Therefore, foreign MNCs are seeking to balance global standardisation and local adaptation, which is a relatively new development although it has been noted in the literature. Thus, MNCs reconcile control and adaptation rather than satisfying one at the expense of the other, whereby the trend is for Western HR policies to be gradually accepted and internalised by the younger generation of the Chinese workforce. Furthermore, drawing from the findings of this research upon the theoretical principles of Harvard Model (Beer et al., 1984), Guess Model (Guess, 1997, 2000) and Choice Model (Analoui, 2007) in terms of the link between HRM policy choices, HRM outcomes and firm performance, this research made recommendations to foreign MNCs to consider the adaptation of a set of HR policies that can generate competitive advantages, enhance employee commitment, increase job satisfaction, which lead to an improvement of firm performance. In addition, this research suggested foreign MNCs not only need to continually recognise the important role of the HR department in the devolvement of HR functions to line managers with the provision of training and organisational assistance, but also need to acknowledge the role of senior managers in achieving vertical integration between HR policies and business strategy and their influence in HR polices. Finally, foreign MNCs are encouraged to engage the HR department in the strategic level of the organisational operations (i.e. strategic planning process), in addition to its involvement on the functional/operational level of activities to achieve the sustained competitive advantage in the contemporary business context of China.

The effects of market orientation on subsidiary performance: Empirical evidence from MNCs in Turkey

Much scholarly work has been devoted to studying the performance implications of market orientation. This study examines the direct and indirect effects of market orientation on financial performance of the subsidiaries of MNCs located in Turkey. The findings indicate that a market orientation affects financial performance of MNC subsidiaries that operate in diverse and complex economic, cultural, and political environments of the Middle East. Moreover, authors demonstrate that the customer-related mechanisms (customer satisfaction and retention) mediate the market orientation–performance relationship. The paper also discusses the theoretical and practical implications of study findings.

Developing Subsidiary Contribution to the MNC:Subsidiary Entrepreneurship and Strategy Creativity

Abstract Despite its theoretical and managerial significance, subsidiary entrepreneurship and its effects on subsidiary contribution remain underexplored in the literature. We propose that subsidiary entrepreneurship encourages more creative strategic responses to escalating environmental change. We explore the direct and mediating effects of subsidiary entrepreneurship on subsidiary contribution to the MNC, particularly subsidiary strategy creativity. We use structural equation modelling to test our propositions on data generated from surveying the population of Irish subsidiaries of foreign MNCs, and find strong support for our theoretical predictions. The managerial implications of subsidiary entrepreneurship in generating creative strategy, prompting strategic initiatives and improving performance are discussed.

Host country effects in multinational companies' performance - empirical evidence from Polish subsidiaries

MNCs, perceived from the institutional and resource dependency perspective, are subject to various pressures that trigger their strategies and operations on a global scale. One of the important forces inclining MNCs to diversify their strategies and structures on the global scale is the impact from host countries. The strength of this impact on MNCs behaviour is discussed here both theoretically and empirically. The article also shows how MNCs actually behave on the Polish market and how and to what extent this host environment influences MNCs operations. The analysis is based on the empirical data derived from the author's research, which was carried out in 35 production subsidiaries of MNCs in 2006-2007. (original abstract)

Control of subsidiaries of MNCs from emerging economies in developed countries: the case of Taiwanese MNCs in the UK

There has been considerable research over the past few decades on the process through which headquarters of multinationals from developed economies exercise control over their network of subsidiaries in foreign countries. However, little research has been conducted on multinationals from emerging economies operating in developed countries. In this article, we examine the motives for, and mechanisms by which, headquarters of Taiwanese multinationals exercise control over their subsidiaries in the UK. The article draws on data collected through 66 interviews with top managers and human resource managers from four UK based subsidiaries of Taiwanese multinationals. The study reveals that Taiwanese multinationals use both output control and behaviour control to manage their subsidiaries in the UK.

HR structure and HR knowledge transfer between subsidiaries in China

PurposeThis paper attempts to examine the issue concerning human resource (HR) structures and the transfer of HR knowledge to discover whether and how HR structure facilitates the transfer of HR knowledge between subsidiaries of an MNC in China.Design/methodology/approachThe investigation, being of an exploratory nature, follows the tradition of a grounded approach. The paper is based on an empirical study of 22 individual HR professionals from 21 Chinese subsidiaries of MNCs. Data were collected through semi‐structured interviews conducted between January and April 2004 and a grounded analysis was carried out with the assistance of Nvivo software.FindingsThe forms of HR structures, especially China centre‐led HR structures, have created an opportunity for developing HR learning networks for sharing HR knowledge amongst sister‐subsidiaries and between the subsidiary and the China centre. These forms of HR structure have also provided an essential foundation for wide collaboration between subsidiaries, and further for creating a knowledge‐sharing culture to facilitate HR knowledge transfer.Research limitations/implicationsThe findings on HR structure and the transfer of HR knowledge have implications for understanding the organisational structure and inter‐subsidiary knowledge transfer.Originality/valueThere is little previous research on HR structure, the transfer of HR knowledge in China, and the link between them. This paper addresses this gap and seeks to contribute to the literature.

Diffusing ‘best practice’ in Chinese multinationals: the motivation, facilitation and limitations

With increasing global integration, the diffusion of ‘best practice’ is a critical activity in MNCs, particularly for those from developing countries which have recently joined global markets. Recent research has suggested that ‘reverse diffusion’ is an important approach to the internationalization of management. However, there is little empirical evidence in support of this argument. This paper draws on in-depth case studies of the UK subsidiaries of Chinese MNCs to explore the nature and characteristics of diffusion activities. It confirms that ‘reverse diffusion’ played a positive part in the internationalization process of these companies, although the impact on the home firms is limited. It also found that new forms of management transfer are emerging in these Chinese MNCs. This suggests that the diffusion of ‘best practice’ in MNCs can be varied with different national and organizational characteristics.

Triggers of the technological capability accumulation in MNCs' subsidiaries: the maquilas in Mexico

Subsidiaries of MNCs oriented towards assembling activities in developing countries gradually accumulate technological capabilities. This is not necessarily the result of a deliberate strategy to build up decentralised capabilities, but an outcome of the learning processes at the plant level. This accumulation generates pressure on the headquarters to acknowledge the achievements and allows plants to carry out activities of higher innovativeness. This paper draws on the analytical framework of technological capability accumulation to examine three cases of subsidiaries of MNCs in Mexico that operate under the maquila regime, and discusses two triggers of the local accumulation process.

How MNCs' perceive and respond to the Polish institutional environment

The article discusses the significance and role of institutional analysis in building up competitiveness of the economy and evaluates condition of the Polish institutional system from the viewpoint of foreign investors. It also analyses an impact of the Polish institutional environment on the status, structure and activities of MNCs operating in Poland. Preliminary results of empirical studies conducted by the author in 20 Polish manufacturing subsidiaries of MNCs are shown and discussed here. The paper begins with a short presentation of what institutions are, what constitutes an institutional environment and discusses the difficulty and importance of its appropriate creation. The next section is a short description of the main features of the Polish institutional environment. Analyses of some empirical data are in the last part of the paper; these concern opinions of MNCs about operating in Poland and information about their internal structure and organizational practices in comparison with analogous sister companies operating in other host markets. (original abstract)