ارتباط شرکت ها و استراتژی رقابتی در شرکت های چند ملیتی : یک چشم انداز از شرکتهای تابعه به دنبال نفوذ در بازار میزبان
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|22504||2004||29 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of International Management, Volume 10, Issue 1, 2004, Pages 77–105
This study examines how the corporate link between a foreign subsidiary and its corporate members (parent and peer subsidiaries) is influenced by the subsidiary's competitive strategy in a specific host country. The mainstream logic, especially that of Michael Porter, suggests that corporate link should be stronger when a multinational enterprise (MNE) focuses on cost leadership than on product differentiation because of greater needs for system-related efforts, such as sharing global economies of scale, optimizing factor costs across countries, and leveraging existing knowledge. Departing from this view, we present that this logic may not hold true for an MNE's foreign subsidiaries seeking local market penetration in promising yet increasingly competitive emerging markets. Corporate link may be stronger when these subsidiaries emphasize product differentiation than using low cost due to heightened needs of corporate resource support tailored to the specific host market and due to declined contributions of system-related efforts to maintain a differentiation-based competitive foothold there. Our analysis of subsidiaries that emphasize host market penetration in China demonstrates that the strength of corporate link increases along cost leadership, strategic focus, and product differentiation strategies. Subsidiaries with such configurations tend to perform better than those without these configurations in terms of profitability. Moreover, there is a stronger correspondence between corporate link and competitive strategy when subsidiaries are wholly owned (compared to joint ventures), involve larger scope of products, or become more important to overall success of their corporate groups.
Corporate link between an overseas subsidiary and its parent as well as peer subsidiaries in other countries has been rigorously addressed in numerous studies on multinational enterprises (MNEs). As described in the research, corporate link is concerned with the extent (or strength) to which a focal subsidiary is linked to its corporate members (parent firm and peer subsidiaries) via sharing strategic resources and activities (Bartlett and Ghoshal, 1989). Parent–subsidiary relations comprise both strategic (flows of critical resources and activities) and administrative (communication and control) dimensions, and corporate link captures the strategic dimension in parent–subsidiary relations and reflects the interdependency between a focal subsidiary and the corporate group Bartlett et al., 1990 and Gupta and Govindarajan, 2000. Corporate link also differs from global integration in that the former emphasizes only resource sharing and value chain activity integration, but the latter involves not only resource sharing and activity integration but also corporate governance integration along dimensions, such as decision-making centralization, reward systems, frequency and openness of communication, socialization, and staffing. With the increasing globalization of world economy, corporate link is becoming an important means for creating global competitive advantages (Govindarajan and Gupta, 2001). Cross-border competition now wrests competitive initiatives by harnessing knowledge from sources in multiple nations to gain more returns from exploiting existing resources and upgrading new capabilities. Research on global integration suggests that MNEs are no longer able to compete as a collection of independent subsidiaries Bartlett and Ghoshal, 1989, Prahalad and Doz, 1987 and Yip, 1995. Competition has become based in part on the ability of the corporation to link its subsidiary activities across geographic locations Birkinshaw et al., 1995 and Kobrin, 1991. Studies on parent–subsidiary relations document that corporate link is shaped by knowledge flow patterns (Gupta and Govindarajan, 1991), headquarters mandates (Jarillo and Martinez, 1990), subsidiary competencies (Marcati, 1989), local environment conditions (Bartlett and Ghoshal, 1989), and organizational slack (Poynter and White, 1985). The literature on subsidiary mandates states clearly that corporate link is influenced by subsidiary characteristics, such as host country experience, operational capabilities, strategic goals, market position, and strength of local management Golden, 1992, Roth and Morrison, 1992 and Roth et al., 1991. To extend extant research, this study suggests that corporate link is also determined by competitive strategy at the foreign subsidiary level. The mainstream logic, especially that of Porter, 1980, Porter, 1985 and Porter, 1991, suggests that corporate link should be stronger when an MNE focuses on cost leadership than on product differentiation because of greater needs for system-related efforts, such as sharing global economies of scale, optimizing factor costs across countries, and leveraging and sharing existing knowledge among geographically dispersed business units around the world. In this study, we argue that this logic may not apply to the situation wherein foreign subsidiaries target centrally at their host market penetration, especially in immensely promising yet increasingly competitive emerging economies. For MNEs that focus on the global strategy, that is, seeking global economies of scale for more standardized products (subsidiaries are a part of global platform for system-wise cost reduction), Porter's logic evidently holds true. This is because a stronger corporate link is needed to streamline and facilitate system-related cost reduction efforts within an MNE's centrally coordinated global network. However, for highly diversified MNEs that do not pursue the global strategy but emphasize transnational or multidomestic solutions, corporate link may be stronger when these subsidiaries emphasize product differentiation than using low cost due to heightened needs of corporate resource support tailored to the specific host market and due to declined contributions of system-related efforts to maintain a differentiation-based competitive foothold in that market. We posit that, for MNE subsidiaries emphasizing the penetration in a foreign emerging market, corporate link between a foreign subsidiary and the rest of the MNE network increases with cost leadership, strategic focus, and product differentiation strategies. The corporate link is strongest if the emphasis is on product differentiation, followed by strategic focus, and then by cost leadership. We realize the important relationship between corporate link and competitive strategy because different competitive strategies implemented in a host country involve different levels of dependence on parent resources, interactions with host markets, and proactiveness in risk taking, adaptation, and innovation. These in turn jointly affect a subsidiary's required corporate link or strategic interdependence. For subsidiaries targeting an important host market, corporate link is an internalized device that can mitigate challenges in implementing varying competitive strategies. We also suggest that an appropriate alignment between corporate link and competitive strategy may result in better performance at the subsidiary level. The logic is that such alignment reduces external transaction costs as well as internal coordination costs. This alignment helps subsidiaries reap benefits from foreign market opportunities or attenuate host country threats through corporate support without incurring unnecessary costs or wasting MNE resources. Furthermore, we propose that the strength of the relationship between corporate link and competitive strategy may be moderated by other factors, such as entry mode, product scope, and the importance of a focal subsidiary to the corporate group. The corporate link-competitive strategy relationship may be stronger when (1) MNE subunits are wholly owned subsidiaries (compared to joint ventures), (2) the product scope in a host market is larger, and (3) a subunit is more important to the parent. As noted in the integration–responsiveness (I–R) paradigm, corporate link is shaped by a large number of external and internal factors associated with required global coordination or required national adaptation Bartlett and Ghoshal, 1989, Birkinshaw et al., 1995, Kobrin, 1991, Prahalad and Doz, 1987, Roth and Morrison, 1990 and Taggart, 1998. Many of these factors seem realistically unable to be included or controlled in a single study. To overcome this issue, we delimited the particular boundary of the study, which should be noted when one interprets our results. First, we focus on MNE subunits seeking host market expansion or penetration, rather than export benefits or using a host country as a production platform for the MNE's global products and global standardization; that is, our results do not apply to the MNEs using global strategy. For subsidiaries under global strategy, their corporate link is mainly determined by the headquarters' global mandates and less affected by a competitive strategy tailored to a specific host market (Gupta, 1987). Second, we examine competitive strategies and advantages that occur at the subsidiary level, rather than at the corporate level. Corporate-link-competitive strategy relations vary according to these levels. For instance, the cost-driven global strategy at the corporate level will require stronger corporate link to streamline global integration and pursue global economy of scale associated with global standardization (Yip, 1995). Contrarily, the cost-driven competitive strategy for a local-market-seeking subsidiary may not need this strong link. Third, our sample subsidiaries operate in the same host country with an emphasis on the technology-intensive electronics and electrical product industry. This partially helps us to remove some national or industrial environment correlates that might affect corporate link. Lastly, we operationalize competitive strategy by the degree of an emphasis on product differentiation, cost leadership, and strategic focus placed by each individual subsidiary (a continuous variable), instead of categorizing sample firms into one of these three dichotomous types. Kotha and Vadlamani (1995) demonstrate that the dichotomous approach is limited in capturing intended strategies of managers in a complex environment.