The article under analysis is devoted to channels of marketing outside a country’s borders, the processual issues pertaining to market control, and the role that is attributed to the head office – subsidiary relations of a global establishment (Grewal et al. 378-398).
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The overarching issue discussed in this article is the way the global organization subsidiaries that are located in other countries balance the directives issued by head offices and the local realities. The authors explore and render an account of the output and control mechanisms employed by such subsidiaries. They also create a conceptual framework of the interdependent practices moderating these mechanisms. These include goal coordination across the controlled firms, consensus-driven decision-making, and relationship conflict resolution. The authors regard these practices through the lens of a contradiction in theory regarding such relationships.
One viewpoint is that formal control can upholster the performance of the subsidiaries by increasing transparency, goal-alignment, and responsibility. The other argues that control mechanisms are ineffective because the subsidiaries are likely to get reactive to whatever is imposed on them. The authors hypothesize that the extent to which the headquarters’ control influences the subsidiaries depends on the circumstances.
Major points of the article
Most importantly, the authors suggest that multinational corporations should stop governing their subsidiaries generically; colloquially speaking, they imply that there is no “one-size-fits-all” approach to such governance. They base this assumption on another important point: that the relationships existing between the headquarters and the subsidiaries depend on the latter’s location and culture. Additionally, the country of the headquarters also has its role in the relationships: the discrepancy in country-specific values can result in a conflict.
Minor points of the article
The authors select several countries and dwell upon the enlisted main points in relation to the relationships existing between these countries’ headquarter establishments and their controlled firms abroad. As subjects of their field study, they explore the German and Japanese businesses operating in the U.S. and demonstrate exactly how the control mechanisms can either improve or exacerbate the operations of their subsidiaries.
For instance, the Japanese are said to base their conduct on pyramid logic (presumably, where the decisions come from the top down relying heavily on the figure of a leader). Such a mechanism allows us to reduce wasteful steps and curb any disagreements in an authoritative manner. At the same time, it does not opt for transparency in decision-making and excludes the very idea of a consensus. German organizations, on the other hand, conduct their operations based on the imperative to transparency and explicitness. Such an approach leaves no place for confusion when allocating goals and coordinating tasks. However, the decision-making process is slowed down by bureaucracy, which makes it less efficient than is desirable.
The methodology of the article
The study employs a cross-sectional survey design wherein the first (qualitative) phase consists of surveying the participants by mail and interviewing them in person. The second (quantitative) phase is the statistical analysis of the data retrieved during the pilot and the questionnaire phases of the research.
Validity and reliability of research variables
As a variable affecting the subsidiaries’ performance, the authors employ the global corporations’ dependence on a particular subsidiary. To consider the corporations’ environment, they use munificence and dynamism. The former assesses the opportunities for expansion at the subsidiary’s location, and the latter measures the variability of the clients’ requirements. The quantity of the subsidiaries’ employees is also included.
The authors realize that a bias factor can be present because the data is obtained qualitatively. To increase reliability, they use informant risk propensity and covariation.
The issue selected for the study is quite interesting, although by no means original. Starting from the 1980s, various studies have been tackling the same issue repeatedly (Deshpande and Webster 3-15; Jain 70-79; Kessapidou and Varsakelis 268-275; Yalcinkaya 202-214). The aim to utilize novel techniques while conducting the analysis adds to the relevance of the present study. However, given that many authors have come to the same conclusions (that the control practices depend on the attributes of the headquarter form and the subsidiaries), the rationale of re-researching the old questions, even from a new perspective, remains quite vague.
The authors understand the arguable credibility of qualitative questionnaires and the technique of interviewing the participants, which is why they account for all possible variables. The informant risk propensity is a significant addition to the research canvas, complementing the exactitude of the analysis once the data selected cannot be regarded as such.
The authors choose the most optimal method for their analysis. Indeed, considering that they are interested in cultural issues as determinants of control mechanisms in foreign markets, such work would subsume retrieving their data from assorted subsidiary organizations’ personnel. The final sample consisted of 500 German and 500 Japanese firms with U.S.-based controlled establishments. It is a large sample, and it adds to the credibility of the research.
The sample consisted of people occupying managerial positions, which is reasonable, considering that it is the managers who are usually tasked with goal coordination and decision-making.
Discussion and conclusions
The authors provide a detailed discussion of their descriptive statistical analysis, which is illustrative, as it were. They conclude that the relationships between the multinational corporations and their subsidiaries located abroad cannot be solely dependent on the interaction of the parent’s and the subsidiary’s leadership or management. The conclusion sounds credible albeit too obvious, and so do the explanations pertaining to the cultural peculiarities in the context of particular control mechanisms and vice versa.
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The discussion section of a research article typically includes a paragraph where the limitations are outlined: by design, timing, resources, or sample size and characteristics. While the authors acknowledge the participant bias in the variables section, they do not include such a paragraph in their conclusions – which is discrepant, considering the many limitations of the cross-sectional study design (Van der Stede 569).
The main managerial implications of the research, as the authors put it, are that managers should be cautious when using control mechanisms, sensitive when maintaining the parent-subsidiary relationships, and coordinate the tasks efficiently. Although these conclusions are believable, the authors do not go further than the fact statement, which questions the initial aim and the very necessity of such research in the first place.
One of the recommendations would be to delve deeper into the limitations of such research. One can also recommend that subsequent research be conducted in the form of meta-analyses, which would be cheaper, less time consuming, and just as efficient as the present one. If such evidence is necessary, it could benefit from expanding the research sites beyond Germany and Japan.
Deshpande, Rohit, and Frederick E. Webster. “Organizational Culture and Marketing: Defining the Research Agenda.” Journal of Marketing 53.1 (1989): 3-15. Print.
Grewal, Rajdeep, Alok Kumar, Girish Mallapragada, and Amit Saini. “Marketing Channels in Foreign Markets: Control Mechanisms and the Moderating Role of Multinational Corporation Headquarters-Subsidiary Relationship.” Journal of Marketing Research 50 (2013): 378-398. Print.
Jain, Subhash C. “Standardization of International Marketing Strategy: Some Research Hypotheses.” Journal of Marketing 53.1 (1989): 70-79. Print.
Kessapidou, Sevasti, and Nikos C. Varsakelis, “The impact of national culture on international business performance: the case of foreign firms in Greece.” European Business Review 14.4 (2006): 268-275. Print.
Van der Stede, Wim A. “A manipulationist view of causality in cross-sectional survey research.” Accounting, Organizations and Society 39.7 (2014): 567-574. Print.
Yalcinkaya, Goksel. “A culture‐based approach to understanding the adoption and diffusion of new products across countries.” International Marketing Review 25.2 (2008): 202-214. Print.