International management control in multinational corporations: The case of Japanese consumer electronics subsidiaries in Southeast Asia.

Abstract

This dissertation examines the relatively neglected issue of international management control in an in-depth study of seven of the major players in the Japanese consumer electronics industry. Japanese firms have become an increasingly powerful and important group of players in the global economic arena, yet almost no research has been conducted on Japanese international management control although a number of authors have identified the control strategies of Japanese firms as a source of distinctive competitive advantage. This dissertation presents an integrated international management control framework which explains both $when$ control will be exercised and what kind of control should be exercised, using a resource dependence perspective. The quantitative and qualitative data on 27 of the Japanese consumer electronics firms' subsidiaries in Southeast Asia are then used to test the theoretical framework. The results from the research indicate that Japanese subsidiaries are under the strong central control of HQs and that there is some support for the prediction that HQs' dependence on the subsidiary leads to greater levels of HQs' control. Although dependence and the need for integration across operating units, driven by the MNC's global strategy, appear to be important variables in determining international management control, the data show that even when Japanese subsidiaries are not highly integrated into the MNC's global strategy, HQs still exercise relatively high levels of control and centralize decision making. The Japanese MNCs use a broad array of control mechanisms, with pure normative controls layered on top of more bureaucratic controls. The results do not support the general perception, however, that pure normative control is the glue that holds Japanese organizations together. The most clan-like subsidiaries in the sample use high levels of rules and surveillance. The results indicate that Japan-centric control, uncovered in early studies, was not merely a passing phase in a Western-style progression from centralized to decentralized operations. Although the Japanese firms may have initially held tightly onto the reigns of control because of a lack of experience, strategic imperatives are forcing them to continue to pursue such a strategy today.