Control in Multinational Corporations (MNCs): The Case of Korean Manufacturing Subsidiaries

M. Susan Taylor

164 citations0/0 files storedJournal of Management

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International Business and FDI Corporate Finance and Governance Accounting and Organizational Management

Abstract

Using both agency theory and comparative national culture frameworks, this study investigated factors determining the degree and type of control used by American and Japanese MNCs on their Korean subsidiaries. Two characteristics of MNCs affected the control they exerted—the degree of MNCs’ ownership, which affected the amount of control, and the nationality of the MNC’s headquarters, which affected the type of control exerted. As predicted, the size of the subsidiary relative to the MNC, moderated the relationship between the degree of ownership and amount of output control the MNC exerted. Overall, the study supported the usefulness of agency theory in explaining the degree of management control exerted, while national culture accounted for the type of control exerted.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1989Agency Theory: An Assessment and Review 1977Estimating Nonresponse Bias in Mail Surveys 1980Agency Problems and the Theory of the Firm 1979A Conceptual Framework for the Design of Organizational Control Mechanisms 2015Strategic human resource management 1980Motivation, leadership, and organization: Do American theories apply abroad?1982Theory Z: How American Business Can Meet the Japanese Challenge

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