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Article
Publication date: 19 September 2016

Satwinder Singh, Geoffrey Wood, Jaithen Alharbi and Tamer K. Darwish

This purpose of this paper is to explore variations in the extent of control mechanisms, according to country of origin and organizational characteristics, in a…

Abstract

Purpose

This purpose of this paper is to explore variations in the extent of control mechanisms, according to country of origin and organizational characteristics, in a challenging country of domicile.

Design/methodology/approach

A survey research design involving the use of a questionnaire as the primary data source was adopted. A total of 350 subsidiaries were initially randomly selected and contacted in person, or via telephone and e-mail, of which 147 agreed to take part in the study and responded to the survey.

Findings

The authors find that Multinational Enterprises (MNEs) from highly financialized Liberal Market Economies will be associated with a greater reliance on formalized control mechanisms; this will enable the MNE’s headquarters to closely monitor subsidiary managers according to objective measures, to ensure that the maximum shareholder value is released.

Research limitations/implications

This study reveals a greater reliance on control mechanisms in larger firms, reflecting a desire to maximize bureaucratic economies of scale.

Practical implications

The authors find that the presence of expatriates regardless of country of origin leads to greater decentralization, suggesting foreign firms do not trust local staff.

Originality/value

This is one of the few studies of this nature conducted for the region of Middle East – and the only one the authors are aware of for Saudi Arabia. Further, it sheds new light on the impact of contextual circumstances on how closely firms monitor their subsidiaries, the challenges of doing business in the Gulf region and the consequences of the large-scale usage of expatriates.

Details

Multinational Business Review, vol. 24 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

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Article
Publication date: 7 November 2016

Jaithen Alharbi, Hamid Gelaidan, Abdullah Al-Swidi and Abubakr Saeed

This study aims to investigated the control mechanisms of headquarters exercised over their subsidiaries and is conducted with the help of primary data.

Abstract

Purpose

This study aims to investigated the control mechanisms of headquarters exercised over their subsidiaries and is conducted with the help of primary data.

Design/methodology/approach

The headquarters–subsidiary model used in this study has four components of control in it: personal centralised control (PCC), bureaucratic formalised control (BFC), output control (OUT) and informal control (INFO). These controls (as an agency mechanism) provide a solid platform on which other mechanisms can be built. Using a data collected from 147 multinational enterprises (MNEs) operating in the Kingdom of Saudi Arabia, the influence of each of these factors on this selection is empirically tested with the help of primary data.

Findings

The study found that Anglo-Saxon countries heavily use impersonal types of control mechanisms, specifically bureaucratic formalised control and output control. Compared to the USA, the level of control in Oriental subsidiaries is less; or, put differently, the latter enjoy a greater degree of autonomy than US subsidiaries. The complementarities of these control mechanisms may be linked to earlier studies that show that successful organisations combine tight control with more open, informal and flexible information and communication exchanges. A focus that bends too much towards formal control or too much towards informal control may threaten a company’s existence. This research provides an empirical explanation on this premise.

Research limitations/implications

The methodology adopted for this study can be extended for similar studies in the Middle East or in Gulf Council Cooperation countries.

Practical implications

The study show that MNEs from different countries often have different dominant control mechanisms and organisational models. This is partly due to different industry distributions, but it is also related to cultural/societal differences between countries. These differences should be considered when searching for a partner in cross-national mergers and acquisitions. Failure to do so could hinder the successful operation of a merger that seems to be perfect from a financial and competitive point of view.

Originality/value

The study explored variations in the extent of control mechanisms, according to country of origin and organisational characteristics, in a challenging country of domicile. This empirical work not only replicates earlier studies, retesting propositions encountered in the existing literature, but also sheds new light on the challenges of doing business in the Gulf region, and the consequences of the large scale usage of expatriates.

Details

Review of International Business and Strategy, vol. 26 no. 4
Type: Research Article
ISSN: 2059-6014

Keywords

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Article
Publication date: 2 May 2017

Abubakr Saeed, Amna Yousaf and Jaithen Alharbi

In times of vivid debates on the inclusion of women on boards, the purpose of this paper is to shed a new light on the composition of boardrooms in emerging market firms…

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Abstract

Purpose

In times of vivid debates on the inclusion of women on boards, the purpose of this paper is to shed a new light on the composition of boardrooms in emerging market firms by investigating how family and state ownership affect board-gender diversity in the emerging economies.

Design/methodology/approach

This study uses Tobit regression to examine the effect of firm ownership on board-gender diversity. A panel data set of Chinese and Indian firms for the period 2004-2013 is used to conduct this study.

Findings

The results show a negative and significant impact of family and state ownership on the proportion of women directors. However, this relationship is seen to be reverse if the firm is operating in international markets. Notably, a negative relationship was seen to persist between ownership structure and board-gender diversity for both female executive and independent board members, whereas a positive impact of internationalization was observed only for independent female directors.

Originality/value

This research addresses the board-gender diversity issue in emerging economies by focusing on firm characteristics which are unique to their business context. Further, this study identifies the conditions under which emerging market firms assimilate or proscribe women on their boards by recognizing the salient features of firms from emerging markets. Hence, in doing so, new evidence is added to the studies on the determinants of board-gender diversity. Lastly, it advances the earlier literature based on resource dependency and agency views and demonstrates the importance of internationalization for the inclusion of women on corporate boards.

Details

Cross Cultural & Strategic Management, vol. 24 no. 2
Type: Research Article
ISSN: 2059-5794

Keywords

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Article
Publication date: 26 July 2013

Jaithen Alharbi and Satwinder Singh

The purpose of this study is to examine the influence of the structural, relational, and cognitive dimensions of knowledge‐sharing in subsidiaries of multinational

Abstract

Purpose

The purpose of this study is to examine the influence of the structural, relational, and cognitive dimensions of knowledge‐sharing in subsidiaries of multinational enterprises (MNEs) located within the Kingdom of Saudi Arabia (KSA), and the impact of knowledge flows on the performance of such subsidiaries.

Design/methodology/approach

A cross‐sectional survey research design, involving the use of a questionnaire to acquire the primary data, is adopted. The analysis is based on 147 completed questionnaires. Descriptive statistics and multivariate regression analysis are used in the analysis of the data.

Findings

Formal control mechanisms are widely used as opposed to informal channels of control. Knowledge flows are associated with personalised or bureaucratic controls. Both mechanisms are negatively associated with performance, whilst output control and informal coordination are positively associated. Increased local presence and subsidiary R&D is positively associated with performance.

Research limitations/implications

The methodology adopted for this study can be extended for similar studies in the Middle East or in GCC countries. Policy makers in host countries in which MNE subsidiaries operate may find the results an important leverage for negotiating with MNEs for R&D to be conducted in their countries. Possible spill‐overs and diffusion effects of such R&D could then also benefit domestic firms.

Originality/value

This is one of few studies of this nature conducted in the Middle East, and the only one in the context of KSA, which has explicitly investigated the connection between knowledge flows, controls, and performance.

Content available
Article
Publication date: 26 July 2013

Nnamdi O. Madichie

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126

Abstract

Details

Foresight, vol. 15 no. 4
Type: Research Article
ISSN: 1463-6689

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