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  • P-ISSN1738-3110
  • E-ISSN2093-7717
  • SCOPUS, ESCI

ISSN : 1738-3110

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Vol.13 No.8

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The Relationship between the Control Level of Foreign Subsidiaries and Performance in the Chinese Market

The Relationship between the Control Level of Foreign Subsidiaries and Performance in the Chinese Market

The Journal of Distribution Science(JDS) / The Journal of Distribution Science, (P)1738-3110; (E)2093-7717
2015, v.13 no.8, pp.15-25
https://doi.org/https://doi.org/10.15722/jds.13.8.201508.15
Kim, Byoung-Goo (Division of Global Business, Hanshin University)
Kim, Gyu-Bae (Dept. of Business Administration, Daejeon University)
Kim, Byoung-Goo, & Kim, Gyu-Bae. (2015). The Relationship between the Control Level of Foreign Subsidiaries and Performance in the Chinese Market. The Journal of Distribution Science(JDS), 13(8), 15-25, https://doi.org/https://doi.org/10.15722/jds.13.8.201508.15

Abstract

Purpose - There is a lack of research on how much corporate control is sufficient for effective subsidiary business-related decision making. To address this research gap, this study analyzes the impact of the level of control of a Korean corporation's headquarters on its overseas subsidiary performance. Research design, data, methodology - The study's sample comes from the Overseas Korean Business Directory of KOTRA. A multiple regression analysis empirically confirmed the relationship between the headquarters level of control over the subsidiaries and their performance. Results - The results show that the greater an organization's headquarters control over strategic issues, the greater the subsidiary's non-financial performance. However, quick decision-making through decentralization promotes the rapid selection of successful new products that can provide a competitive advantage. Conclusion - This study shows that the impact of control levels on subsidiary performance depends on the type of control involved. Specifically, while low levels of control over operational issues had a positive (+) influence on subsidiary non-financial performance, high control levels led to improved non-financial performance with regard to strategic issues among the subsidiaries.

keywords
Multinational Company, Headquarter, Foreign Subsidiary, Control Level, Subsidiary Performance, Chinese Market

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