Parental control: A study of U.S. subsidiaries in Mexico

This study develops a framework that suggests that subsidiary characteristics, such as performance, purpose and manager nationality affect the extent of control and mechanisms of control (i.e., results, cultural and action controls) that their parent companies exercise over them. Hypotheses were tes...

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Bibliographic Details
Published in:International business review 2009-10, Vol.18 (5), p.481-493
Main Authors: Lovett, Steven Russell, Pérez-Nordtvedt, Liliana, Rasheed, Abdul A.
Format: Article
Language:English
Subjects:
Business management
Business networks
Economic performance
Managers
Mexico
Mexico Parental control Subsidiary purpose
Monitoring
Nationality
Parental control
Social control
Subsidiary
Subsidiary purpose
U.S.A
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Summary:This study develops a framework that suggests that subsidiary characteristics, such as performance, purpose and manager nationality affect the extent of control and mechanisms of control (i.e., results, cultural and action controls) that their parent companies exercise over them. Hypotheses were tested using survey responses from 44 Mexican subsidiary—U.S. parent dyads. As expected, results suggest that parental perceptions of subsidiary performance are inversely related to the extent of control that parent companies exercise over these subsidiaries. It was also found that subsidiaries established for purposes relating to a knowledge seeking motivation tended to be subject to more cultural control, but no support was found for the hypothesized relationships between market purpose and results control, and resource purpose and action control. Finally, also as predicted, Mexican managers tended to be subject to greater action control by their U.S. parent than American managers.
ISSN:0969-5931
1873-6149
DOI:10.1016/j.ibusrev.2009.05.001