MNC subsidiary performance, risk, and corporate expectations
Section snippets
The A–PJ model
As noted above, the A–PJ model of subsidiary strategy is developed on the basis of two key dimensions, autonomy and procedural justice, that appear to interact in a systematic manner (Taggart, 1997a). The procedural justice dimension is derived from law and social psychology scholarship, and was extended into international business strategy in a series of closely argued papers (Kim & Mauborgne, 1991, Kim & Mauborgne, 1993a, Kim & Mauborgne, 1993b). It is defined as the “social psychological
Research propositions
Following from the prior discussion, a number of research propositions are suggested for investigation in this paper. The basic postulate is that a sample of manufacturing subsidiaries may be readily classified into four groups according to Fig. 1. However, as the A–PJ paradigm is in the early stages of development, additional classification along alternative strategic dimensions will validate the model and help future researchers to frame more specific hypotheses. Thus, we may expect that each
Sample
A small sample (eight affiliates) was used to pre-test a research instrument for validity and reliability. A postal questionnaire was deemed to be the appropriate data collection method due to research grant restraint; this method also allowed results to be generalised. Published registers of foreign manufacturing subsidiaries located in Ireland, Scotland, Wales and Ulster allowed a mailing list of 1000 firms (350, 300, 250, 100 respectively) to be constructed. The pre-tested and amended
Data analysis
A four stage procedure was used to analyse data gathered in the mail survey. As a first step, orthogonality of the model dimensions was confirmed by subjecting the seven autonomy and five procedural justice variables to factor analysis. All variables were found to load significantly and uniquely on their respective factors, and only these two factors emerged from the analysis (Roth & Morrison, 1990). Second, it was deemed appropriate to aggregate and average these two groups of variables as the
Results
Factor analysis of the autonomy and procedural justice variables confirmed that the model dimensions are orthogonal, that only two underlying factors were present, and that all variables load uniquely and significantly on the appropriate dimensions. The seventeen strategic variables were then included with the twelve dimensional variables in a further factor analysis, which produced a seven factor solution. Two of these, as expected, corresponded again to autonomy and procedural justice. None
Discussion
It seems clear from the results set out above that the four subsidiary types of the A–PJ model are clearly separated by the seventeen strategy variables (see Appendix A). This indicates a substantial degree of meaningful interaction between the two dimensions of the model. These interactions suggest that there is strong linkage between behavioural aspects of subsidiary management and managers' perspectives on these matters of performance, risk and corporate expectations. Comparison with
Summary
Taking the survey evidence and post-test interview material together, it would appear that, as we work through the progression vassal–collaborator–militant–partner, subsidiaries perform better against industry norms, but become less focused on HQ's view of their performance. The very nature of the post-test interviews was also revealing. As we move along the classification continuum from vassal to partner, interviews became both longer and more relaxed. This partially subjective view is clearly
Conclusion
This paper has developed additional empirical validation for the A–PJ model of subsidiary strategy. The four types of subsidiary were found to be differentiated across a range of performance and risk variables. Vassals and partners were most clearly separated (by 11 of the 17 strategic variables), followed by vassals and collaborators(6 variables), vassals and militants (5), militants and partners (5), collaborators and militants (3), while collaborators and partners were separated by only one
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