In 2010, it was an innovational investigation that created a foundation for many further types of research. The most important feature of this research is that it determines the interrelation between subsidiary performance and headquarter attention based on the empirical data of 283 acting subsidiaries worldwide. Therefore, the result of this study is not just a theoretical basis, but a practical guide to action for managers at the international level.
Motivation
The motivation of the article is to conduct empirical research in the field of headquarters’ attention to the subsidiary performance and its impact on it. The principal value of the conducted research is in the first attempt to combine two areas separately investigated before – attention as an organizational resource both for the entire corporation and individual or top/middle management approach. The authors aim to clarify the way top managers interpretation of the strategic environment and the attention paid to specific issues impact corporate actions and performance, revealing the subsidiary characteristics affecting and contributing to headquarter-subsidiary relationships.
The Key Essence
Attention directly affects both immediate and strategic action, defining the level and quality of subsidiary performance. The study’s main proposal was as follows: the more freedom in choice subsidiary has along with the attention, the better it performs. The subsidiary performance was analyzed in terms of hypothetical possession of attention combined with a) autonomy, b) inter-unit power, c) initiative. The hypotheses were tested utilizing moderate multiple regression in the statistical approach, evaluating management and financial performance. Slightly locally adapted, standardized surveys were used for data collection to avoid bias. Moreover, publicly available secondary sources have been examined either. The variables used included attention and profile-building (meta-construct), autonomy, initiatives, and performance (reflective constructs), market competitiveness, and power (computed indices). The fundamental essence of the study is revealing more effective ways of managing MNCs. It aimed to research the concept of attention in terms of headquarter-subsidiary relationships framework, as its role has been undeservedly underestimated earlier.
Results of Researches
The researches resulted in both theoretical and empirical evidence applicable for further practical use. The results revealed no direct correlation between the headquarter’s attention and the subsidiary’s performance. Nevertheless, it increases performance when it comes to interaction with strategic choice, especially that of high levels. The main empirical result of this research is proof that the subsidiaries provided with individual freedom in the strategic decision but not deprived of attention show higher performance levels than those endowed with only one of these sources. Theoretical contribution: the way top management interprets strategic issues influences further company’s strategic actions and, thus, ultimately affects the performance of subsidiaries. This statement has become another prospective topic for new, more thorough researches for the authors. Both theoretical and empirical contributions of the conducted study became an invaluable discovery in the fields of effective control and coordination methods.
Important Management Consequences of the Research Results
Practicing top managers can benefit significantly from this study in terms of headquarter-subsidiary relationships. Previously, many of them disregarded this powerful tool of overall company’s performance, betting on more commonly used management strategies. The headquarters ‘ top management should focus their attention evenly on all the subsidiaries, no matter how high their strategic choice level is. Moreover, providing the highest possible choice level also allows the whole company to benefit to the maximum subject to competent control. In turn, subsidiary managers should concentrate on coordinating strategic choice level and attention in balance, as giving preference to one of these factors is obviously not the most winning and effective policy.