The influence of Multinational Enterprises on Subsidiaries: Context Matters

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The influence of Multinational Enterprises on Subsidiaries: Context Matters. / Egbe, Inya; Adegbite, Emmanuel; Yekini, Kemi.

In: Accounting, Auditing and Accountability Journal, Vol. 31, No. 5, 19.02.2018, p. 1-23.

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@article{154a7539634f440da16087f536895a41,
title = "The influence of Multinational Enterprises on Subsidiaries:: Context Matters",
abstract = "Purpose – This paper examines how differences in the institutional environment of a multinational enterprise (MNE) shape the role of management control systems (MCSs) and social capital in the headquarters-subsidiary relationship of an emerging economy MNE.Design/methodology/approach – A case study design was adopted in this research. Data was gathered by means of semi-structured interviews, document analysis and observations. Interviews were conducted at the Nigerian headquarter (HQ) and United Kingdom (UK) subsidiary of the Nigerian multinational enterprise.Findings – The study found that the subsidiary operated autonomously, given its residence in a stronger institutional environment than the HQ. Instead of the HQ depending on MCSs as a means of coordination and control, it relied on social capital that existed between the HQ and the subsidiary to coordinate and integrate the operation of the foreign subsidiary studied.Originality/value – The reliance on social capital as a means of coordination and control of the foreign subsidiary in this study is significant, given that previous studies have indicated that multinational HQs normally employ MCSs as a means of control of foreign subsidiaries. Also, while previous studies have suggested that MNEs HQs have better expertise which enables them to design and transfer MCSs to foreign subsidiaries, this study found that such expertise relates to the institutional environment from which the HQ is operating from. Through the lens of institutional sociology theory and social capital theory, these findings directly contribute to the literature on the transference of practices and control systems in accounting and international business literatures.",
keywords = "Emerging multinational enterprises , Multinational enterprises , Management control systems , Social capital , New institutional sociology , Headquarter-subsidiary relationship",
author = "Inya Egbe and Emmanuel Adegbite and Kemi Yekini",
year = "2018",
month = feb,
day = "19",
doi = "10.1108/AAAJ-06-2016-2608",
language = "English",
volume = "31",
pages = "1--23",
journal = "Accounting, Auditing and Accountability Journal",
issn = "0951-3574",
publisher = "Emerald",
number = "5",

}

RIS

TY - JOUR

T1 - The influence of Multinational Enterprises on Subsidiaries:

T2 - Context Matters

AU - Egbe, Inya

AU - Adegbite, Emmanuel

AU - Yekini, Kemi

PY - 2018/2/19

Y1 - 2018/2/19

N2 - Purpose – This paper examines how differences in the institutional environment of a multinational enterprise (MNE) shape the role of management control systems (MCSs) and social capital in the headquarters-subsidiary relationship of an emerging economy MNE.Design/methodology/approach – A case study design was adopted in this research. Data was gathered by means of semi-structured interviews, document analysis and observations. Interviews were conducted at the Nigerian headquarter (HQ) and United Kingdom (UK) subsidiary of the Nigerian multinational enterprise.Findings – The study found that the subsidiary operated autonomously, given its residence in a stronger institutional environment than the HQ. Instead of the HQ depending on MCSs as a means of coordination and control, it relied on social capital that existed between the HQ and the subsidiary to coordinate and integrate the operation of the foreign subsidiary studied.Originality/value – The reliance on social capital as a means of coordination and control of the foreign subsidiary in this study is significant, given that previous studies have indicated that multinational HQs normally employ MCSs as a means of control of foreign subsidiaries. Also, while previous studies have suggested that MNEs HQs have better expertise which enables them to design and transfer MCSs to foreign subsidiaries, this study found that such expertise relates to the institutional environment from which the HQ is operating from. Through the lens of institutional sociology theory and social capital theory, these findings directly contribute to the literature on the transference of practices and control systems in accounting and international business literatures.

AB - Purpose – This paper examines how differences in the institutional environment of a multinational enterprise (MNE) shape the role of management control systems (MCSs) and social capital in the headquarters-subsidiary relationship of an emerging economy MNE.Design/methodology/approach – A case study design was adopted in this research. Data was gathered by means of semi-structured interviews, document analysis and observations. Interviews were conducted at the Nigerian headquarter (HQ) and United Kingdom (UK) subsidiary of the Nigerian multinational enterprise.Findings – The study found that the subsidiary operated autonomously, given its residence in a stronger institutional environment than the HQ. Instead of the HQ depending on MCSs as a means of coordination and control, it relied on social capital that existed between the HQ and the subsidiary to coordinate and integrate the operation of the foreign subsidiary studied.Originality/value – The reliance on social capital as a means of coordination and control of the foreign subsidiary in this study is significant, given that previous studies have indicated that multinational HQs normally employ MCSs as a means of control of foreign subsidiaries. Also, while previous studies have suggested that MNEs HQs have better expertise which enables them to design and transfer MCSs to foreign subsidiaries, this study found that such expertise relates to the institutional environment from which the HQ is operating from. Through the lens of institutional sociology theory and social capital theory, these findings directly contribute to the literature on the transference of practices and control systems in accounting and international business literatures.

KW - Emerging multinational enterprises

KW - Multinational enterprises

KW - Management control systems

KW - Social capital

KW - New institutional sociology

KW - Headquarter-subsidiary relationship

U2 - 10.1108/AAAJ-06-2016-2608

DO - 10.1108/AAAJ-06-2016-2608

M3 - Article

VL - 31

SP - 1

EP - 23

JO - Accounting, Auditing and Accountability Journal

JF - Accounting, Auditing and Accountability Journal

SN - 0951-3574

IS - 5

ER -