Journal of International Management
12 (2006) 23 – 45
Control mechanisms of their subsidiaries by
multinational firms: A multidimensional perspective
Jacques Jaussaud a,⁎, Johannes Schaaper b
a
University of Pau, Institute of Business Administration of the University of Pau, Domaine Universitaire,
Avenue du Doyen Poplawski, BP 575, 64000 Pau Cedex, France
b
University of Poitiers, France
Received 23 March 2004; received in revised form 1 July 2004; accepted 21 April 2005
Available online 24 March 2006
Abstract
Multinational companies use a wide range of mechanisms to keep control over a subsidiary abroad such
as the share of capital in the case of international joint ventures, expatriation, active participation in the
board of directors, staffing key management positions, training and socialization of employees, technology
transfer, and so on. However, only a few empirical studies on the control of international subsidiaries
embrace all these dimensions simultaneously and show how they interact. This paper presents the empirical
results of a quantitative survey of 316 subsidiaries, international joint ventures and wholly foreign owned
enterprises, set up in China by European and Japanese multinationals. The main objective of the survey is to
bring out an inductive multidimensional model of control, and to allow a better understanding of complex
interaction and balance between the instruments of control of a subsidiary abroad.
© 2006 Elsevier Inc. All rights reserved.
Keywords: Joint ventures; Control; Subsidiaries; Multinationals; China
With the ongoing globalization, the question of organization and control of subsidiaries abroad
has been widely addressed in academic literature in the last three decades. As Geringer and Hebert
(1989) noticed, control practices in international joint ventures primarily determine their success
or failure. Although Multinational Companies (MNCs) have created more wholly owned
subsidiaries than international joint ventures since the beginning of the 1990s (Jaussaud et al.,
2001), the question of the control of their activities worldwide remains a crucial issue.
⁎ Corresponding author. Tel.: +33 5 59 40 80 74, +33 5 59 40 81 09; fax: +33 5 59 40 81 10.
E-mail addresses: jacques.jaussaud@univ-pau.fr (J. Jaussaud), jschaaper@iae.univ-poitiers.fr (J. Schaaper).
1075-4253/$ - see front matter © 2006 Elsevier Inc. All rights reserved.
doi:10.1016/j.intman.2005.04.001
24
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Control may be defined as “the process by which one entity influences, to varying degrees, the
behaviour and output of another entity through the use of power, authority and a wide range of
bureaucratic, cultural and informal mechanisms” (Geringer and Hebert, 1989). In this paper, we are
interested in the way in which multinational firms control their subsidiaries abroad, both wholly
owned subsidiaries (WOS) and those shared with local partners in the form of international joint
ventures (IJVs).
Scholars have emphasized the diversity of instruments that MNCs can use in order to control their
subsidiaries. They have suggested that a judicious combination of several instruments according to
the context might be the key to their success and that the control of a subsidiary abroad is a complex
multidimensional phenomenon (Schaan, 1983; Geringer and Hebert, 1989; Martinez and Jarillo,
1989).
Studying the interaction of various instruments of control requires data that is often not
available in most directories and databases and must be collected through specific enquiries in an
international context. For this reason, a relatively small number of papers have studied the way
MNCs effectively combine different instruments of control.
This article is based on a survey of 316 European and Japanese subsidiaries in China that we
carried out in 2001 and 2002. We investigate how MNCs combine various instruments and
mechanisms in order to control their subsidiaries in China. Following the advice of Geringer and
Hebert (1989), our main objective is to bring out a multidimensional model of control by means of
inductive exploratory factor analysis.
Section 1 of this paper gives a synthesized review of literature and past empirical investigations on the question of control of subsidiaries abroad. An examination of their methodologies, sample sizes, shortcomings and suggestions for future research shows why our inductive
analysis is necessary at this stage of research. Section 2 develops the quantitative methodology of
our research. Section 3 presents the main statistical results of our survey in two steps. First, an
inductive factor analysis leading to a multidimensional model shows how MNCs combine main
mechanisms in order to control their subsidiaries in China. Secondly, further analysis of the
relative positioning of the responding subsidiaries to our survey on the factor map indicates the
differences in control practices between international joint ventures and wholly owned subsidiaries as well as between European and Japanese subsidiaries.
1. Review of literature on the question of control of foreign subsidiaries
1.1. An inventory of studies on control of subsidiaries abroad between 1988 and 2002
The review of literature purports to underline the evolution in empirical and conceptual studies
in the field of the control of subsidiaries abroad. Table 1 summarizes their methodologies and
sample sizes. An analysis of their limitations and suggestions for future research calls for an
inductive factor analysis that we expound here.
The starting point of this review is the inventory of the empirical studies undertaken between
1953 and 1988 in the field of the “mechanisms of coordination” in multinational corporations,
carried out by Martinez and Jarillo (1989). They divide research on coordination mechanisms into
three main streams. The first stream gathers the earlier studies, which were practically all
“centered on the formal mechanisms of coordination.” In fact, those studies hinged more
specifically on the organizational structure of multinational firms and addressed such topics as the
emergence of international divisions or the relations between the head office and their daughter
firms. The second stream focuses on the study of centralization of decision-making and
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
25
bureaucratic control (standardization, written procedures, reporting). The third stream deals with
more informal and subtle mechanisms of coordination, such as lateral relations between
managers, integrative mechanisms, socialization, communication, reward systems and incentives
to managers for individual performance. Then Martinez and Jarillo (1989) divide mechanisms of
coordination “roughly into two groups.” The first group, called “structural and formal
mechanisms,” contains five subgroups: departmentalization, centralization of decision-making,
formalization and standardization, planning, output and behaviour control. The second group,
dubbed “more informal and subtle mechanisms,” contains three subgroups: lateral relations,
informal communication and socialization.
Following the suggestion of Martinez and Jarillo (1989), we have worked out a cross table that
synthesizes control mechanisms as investigated in twenty-five studies1, published between 1988
and 2002.
Some recent studies (Ding, 1997; Mjoen and Tallman, 1997) still use the Killing's (1982)
taxonomy which merely differentiate dominant parent control, shared control from dominant
partner control, without specifying mechanisms that secure such dominant control. Also using
Killing's concepts, Zhang and Li (2001) state however that control dominance can be obtained via
capital resources, the Board of Directors and the centralization of decision making, whereas Lee et
al. (1998) acknowledge that “control is a multidimensional phenomenon.”
1.2. Methodologies used in previous studies on control
Table 1 shows a great diversity of methodologies of empirical studies. Conceptual studies
(Martinez and Jarillo, 1989; Geringer and Hebert, 1989; Das and Teng, 1998; Legewie,
2002) attempt to put the main conclusions of existing empirical studies into broader
perspectives. Exploratory studies (Geringer and Frayne, 1990; Yan and Gray, 1994; Groot
and Merchant, 2000; Zhang and Li, 2001) are based on a small number of personal indepth interviews mainly with CEOs in charge of international joint ventures. The
conclusions that are drawn from these interviews are often of great interest as they explain
what is at the root of the control structures observed. However, as they are based on very
small samples, these conclusions need to be generalized by means of empirical testing on
bigger samples.
Using secondary data from directories (Lee et al., 1998; Delios and Björkman, 2000; Jaussaud
and Schaaper, 2001) allows to work on big samples. However, the available data in these
directories often relate to a small number of control mechanisms only. Therefore, it gives a true (or
realistic) insight into the use of these specific control mechanisms but does not help to put them
into a more multidimensional perspective.
Primary data in an international context is mainly collected by postal surveys sent to the
CEOs in charge of subsidiaries or to managers at the head offices. This is why our table
sometimes mentions the number of responding MNCs and at the same time the number of
responding subsidiaries (Harzing, 1999, 2000; Mjoen and Tallman, 1997). The advantage of
postal questionnaires is that they can be designed around a specific research question. As
such, they are a valuable research device, well suited for quantitative statistical analysis.
However, return rates in an international context are often low, especially when the
research team and the responding CEOs are of different nationalities. For this reason, the
1
This table does not claim to be exhaustive; its main goal is to pinpoint the principal mechanisms of control studied in
an international context.
26
Equity share,
ownership,
capital resources
Schaan (1988)
Martinez and Jarillo (1989)
Geringer and Hebert (1989)
Geringer and Frayne (1990)
Martinez and Jarillo (1991)
Gupta and Govindarajan (1991)
Yan and Gray (1994)
Glaister (1995)
Ding (1997)
Mjoen and Tallman (1997)
Das and Teng (1998)
Lee et al. (1998)
Kumar and Seth (1998)
Child and Yan (1999)
Calantone and Zhao (2000)
Isobe et al. (2000)
Groot and Merchant (2000)
Delios and Björkman (2000)
Harzing (2000)
Zhang and Li (2001)
Luo et al. (2001)
Yan and Gray (2001)
Jaussaud et al. (2001)
Luo (2001)
Legewie (2002)
Total
1
1
1
1
1
1
1
1
Staffing of key
management
functions
Formal organization
structure (documents,
procedures, output)
Subsidiary's Board
of Directors;
veto rights
Socialization
(values, culture,
trips, …)
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Relative dominant managerial control
Control over specific activities versus overall control
1
Foreign dominant, shared, local dominant control
1
1
1
1
1
1
1
1
1
1
Planning and
management
by objectives
1
1
1
1
13
12
1
1
1
Informal
control
Centralization of
decision making
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Sending expatriated
managers on long-term
appointments
1
1
1
1
1
1
1
1
1
1
1
1
12
11
7
7
1
8
8
6
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Table 1
An inventory of studies on control mechanisms of subsidiaries abroad published since 1988
Lateral
relations
(teams, task
forces,
committees)
Schaan (1988)
Martinez and Jarillo (1989)
Geringer and Hebert (1989)
Geringer and Frayne (1990)
Martinez and Jarillo (1991)
Gupta and Govindarajan (1991)
Yan and Gray (1994)
Glaister (1995)
Ding (1997)
Mjoen and Tallman (1997)
Das and Teng (1998)
Lee et al. (1998)
Kumar and Seth (1998)
Child and Yan (1999)
Calantone and Zhao (2000)
Isobe et al. (2000)
Groot and Merchant (2000)
Delios and Björkman (2000)
Harzing (2000)
Zhang and Li (2001)
Luo et al. (2001)
Yan and Gray (2001)
Jaussaud et al. (2001)
Luo (2001)
Legewie (2002)
Total
Provision
of physical
resources
Non-capital
resources,
transfer
of knowledge
and expertise
Incentives and
control of the
performance
of managers
Evaluation
and
behavior
control
Organizational
structuring by
departmentalization
Training of
the
subsidiary's
employees
and managers
1
1
1
1
Short-term
management
appointments
1
1
1
1
1
1
1
1
1
1
1
1
Relative dominant managerial control
Control over specific activities versus overall control
1
Specific versus overall control
1
1
6
1
3
5
4
2
2
Conceptual,
empirical,
exploratory
character of
the study
Sample size
6
10
8
5
7
6
6
6
Empirical descriptive
Conceptual
Conceptual
Exploratory
Empirical descriptive
Empirical descriptive
Exploratory
Empirical descriptive
Empirical explanatory
Empirical causal
Conceptual
Empirical explanatory
Empirical explanatory
Empirical causal
Empirical causal
Empirical causal
Exploratory
Empirical explanatory
Empirical descriptive
Exploratory
Empirical explanatory
Empirical causal
Empirical explanatory
Empirical explanatory
Conceptual
23 IJVs
–
–
3 IJVs
50 IJVs
359 subsidiaries
12 interviews, 4 IJVs
94 IJVs
34 IJVs; 2 interviews
102 IJVs, 37 MNCs
–
704 IJVs, sec. data
128 IJVs, 64 MNCs
212 managers, 67 IJVs
312 IJVs and some interviews
220 IJVs
3 IJVs
797 IJVs and WOS, sec. data
287 WOS/104 MNCs
8 IVJs interviews
295 IJVs
90 IJVs
868 IJVs and WOS, sec. data
129 IJVs + 22 interviews
Interviews, secondary data
2
3
2
6
5
3
3
4
2
7
3
6
5
2
3
1
Foreign dominant, shared, local dominant control
1
1
1
1
1
Total number
of control
mechanism
considered
2
1
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Table 1 (continued)
27
28
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
samples listed in Table 1 are for the most part rather small, ranking from 23 (Schaan,
1988) to 359 observations (Gupta and Govindarajan, 1991).2
Empirical descriptive studies try to infer statistical association by means of various statistical
techniques such as correlation (Gupta and Govindarajan, 1991), chi-square statistics (Glaister,
1995), multivariate factor analysis (Martinez and Jarillo, 1991) or ANOVA comparison of mean
values (Harzing, 2000). The control mechanisms considered in these descriptive studies are not
split into dependent and independent variables. On the contrary, empirical explanatory analysis
typically takes one dependent variable. It can be ownership (Luo, 2001; Lee et al., 1998), or the
number of expatriated managers sent to a subsidiary (Jaussaud et al., 2000; Delios and Björkman,
2000), or the performance of the subsidiary (Luo et al., 2001; Ding, 1997). This variable has to be
explained by other control mechanisms and/or contingent environment variables. These
explanatory studies mostly use multiple regression analyses.
In fact, regression analysis illustrating ownership strategies by a list of explaining variables can
be seen as the first stage of a confirmatory causal analysis (Luo, 2001; Lee et al., 1998, but also
Zhao and Zhu, 1998; Delios and Beamish, 1999). Indeed, causal analysis typically tries to link
control mechanisms, for instance ownership, both to their antecedents (motivation, objectives,
bargaining power, cultural distance) and to their consequences (performance of the subsidiary or
satisfaction of the partners involved) (Child and Yan, 1999; Calantone and Zhao, 2000; Isobe et al.,
2000; Yan and Gray, 2001; Mjoen and Tallman, 1997).
1.3. Theoretical positioning of our inductive study
A first conclusion from our inventory is that empirical studies often use small samples.
Furthermore, when empirical studies are based on more significant samples, they use mostly
secondary data especially from directories. This can be explained by the difficulties of gathering
good international primary data because of cultural and geographical distance or linguistic
problems and so on. Our sample of 316 subsidiaries in China can thus be considered as a
relatively big sample, as it contains primary data relating to more than hundred variables.
A second conclusion is the wide range of control mechanisms that empirical studies take into
account. Since 1988, the twenty or so mechanisms and instruments of control that have been
studied empirically, can be subdivided into three groups according to the frequency of their
occurrence in the listed contributions. A first group contains four main control mechanisms,
which have been most frequently considered: ownership and other capital resources, staffing of
key management functions, formalization of the subsidiary's organization and the strategic use of
the subsidiary's board of directors. These four main mechanisms of control have been of course
included in our factor analysis which will be developed in Section 3. A second large group of
control mechanisms, that is also fairly frequently studied in academic literature, consist of the
socialization of employees, management by objectives, assignment of expatriated managers,
informal control, centralisation of decision-making, lateral relations between managers of the
subsidiary, provision of physical resources and transfer of knowledge. Most of these
mechanisms3 are included in our investigation. However as some of them are not well
represented in our inductive factor analysis, they do not appear on the final factor map. The last
group contains the mechanisms that are not often studied in the relevant literature. Two of these
2
Taking into account the listed empirical surveys based on primary data, the mean size of their samples is 133
responding subsidiaries.
3
Except for management by objectives and the centralization of the decision making.
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
29
mechanisms, training of the subsidiary's employees and short-term management appointments,
are nevertheless included in our factor analysis.
As a third main conclusion from our inventory, one can observe that most empirical researches
examine between two and six control mechanisms. This confirms the opinion of Martinez and Jarillo
(1989) that “an evolution from unidimensional to multidimensional perspectives on coordination
can be observed.” According to them, a reason for this evolution is the fact “that scholars have a
better understanding of deeper processes inside complex large firms” but also “the growing
sophistication of managers using more subtle coordination mechanisms.” However, we agree with
Kumar and Seth (1998) that “most studies are not integrative across mechanisms […] each study
considers only one or two of these rather than a whole range of mechanisms. Few of them show the
complementary or alternative uses that can be made of these control mechanisms, according to
contingent situations.” Even when empirical contributions relate to five or six mechanisms
simultaneously, their statistical analyses treat them in pairs and show neither their interaction nor
their complementary or alternative implementation. Therefore, we think that the actual empirical
research does not lead to a conclusive, in-depth insight into the multidimensional interaction of the
control mechanisms within the subsidiary. As Geringer and Hebert (1989) have already put forward:
“theory development is necessary.” More recently, Groot and Merchant (2000) express the same
wish: “theory development and refinement is more important at this stage of knowledge than is
proposition testing.” Lee et al. (1998) point out that “one area ripe for future research is investigation
into the dimensions of management control and the potential inter-relatedness among elements of
IJV management control.” This is exactly the main objective of our inductive factor analysis.
One more conclusion can be drawn from our inventory of empirical studies. Except for
Harzing (2000), only IJVs are studied whereas nowadays MNCs also widely set up WOS even in
developing countries or countries in economic transition such as China. In our sample, 52% of the
subsidiaries are wholly owned subsidiaries. This is consistent with the findings by Jaussaud et al.
(2000, 2001) who state, on the basis of data from the Kaigai Shinshutsu Kigyô Sôran directory
(ed. Tôyô Keizai, 1999), that nowadays even in developing countries, Japanese MNCs create
more wholly owned subsidiaries than IJVs. This is the reason why wholly owned subsidiaries and
international joint ventures are treated together in our factor analysis. We recognize, as underlined
by one of the reviewers of this paper, that control and management of wholly owned subsidiaries
can be regarded as intra-firm in nature, whereas the issues of control of joint ventures are interorganizational and largely determined by the relative bargaining power between partners.
However, as we investigated the control of subsidiaries in a transition economy, namely China,
we think it makes sense to emphasize risk and asymmetry of information towards local
organizations such as suppliers, customers, central and local authorities both for wholly owned
subsidiaries and joint ventures. In the first step of our factor analysis we pool wholly owned
subsidiaries and international joint ventures because we consider the foreign subsidiary, whatever
its nature, as immersed in a rather unknown environment: control is not only relevant to the
partner but also to a number of local agents. However, in a second step of our statistical analysis,
we highlight differences in the multidimensional use of control mechanisms between wholly
owned subsidiaries and international joint ventures.
2. Empirical methodology
When Hennart (1991) studied the share of capital as an instrument of control, he wrote that
“much of the variance [of ownership levels] can be attributed to host country conditions, such as
political risk or restrictions on incoming foreign direct investment; […] by analyzing MNCs based
30
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Table 2
Summary of statistics of the administration of the survey
European subsidiaries
Japanese subsidiaries
Total
(a)
(b)
(c = a + b)
(d)
(e = d / c)
(f = d / ∑id)
Post
Email
Contacts
Return
Return rate
% of sample
1681
1000
2681
1512
–
1512
3193
1000
4193
163
153
316
5.1%
15.3%
7.5%
51.6%
48.4%
100%
in a single country it is possible to focus on the impact of firms' strategies….” Like Hennart, we
have chosen to eliminate the host country bias by studying the control of subsidiaries established
in one country only: China.4 While China has increasingly opened up in the past 25 years, a great
number of multinational firms have already invested or are actually planning to establish there,
looking for low production costs or promising market prospects. However, unlike Hennart (1991)
who studied only the MNCs of one country of origin (Japan), we opted for the study of MNCs
originating from various countries, especially from Japan and Europe.
2.1. Sample
We drew up a broad quantitative questionnaire, with 23 main questions defining more than 160
variables in relation to a multitude of instruments and mechanisms of control frequently quoted in
management literature. Our questionnaire was sent partly through the post and partly through the
Internet. We created six websites with electronic questionnaires and drew up four paper
questionnaires, one for each specific European country and for Japan. The websites and paper
questionnaires listed exactly the same questions but were customized to take into account specific
expressions like “German expatriates,” “French expatriates” and so on. All European electronic and
paper questionnaires were in English except for the French and Japanese ones, which were in the
vernacular. When the survey was administrated by means of Internet, we sent an e-mail message
with a hypertext link to a specific website where the receiver could fill in our questionnaire. On the
postal paper, we indicated the Internet address of the survey. Our colleagues from the National
University of Yokohoma5 took total charge of the administration of the Japanese questionnaire.
They chose to send it to Japanese subsidiaries through the post because, in their opinion, it
traditionally yields high return rates.
We addressed the questionnaires to expatriated or local managers in charge of the subsidiaries
in China, and not to managers working at the head office of the MNC. As the managers in China
are confronted with the daily IJV problems, we think that their view on control of subsidiaries is
most realistic.
In order to list European postal and email addresses we used several professional
directories: the Directory of German Companies in China (2000), the Directory of French
Companies in China (2001–2002), the British Business in China and the directory of
Members of British Chambers of Commerce in China. We also used email listings published
on the Internet by the European Union Chamber of Commerce in China, the Spanish
Chamber of Commerce in China and the Italian Chamber of Commerce in China. All the
4
5
For historical and economic reasons, subsidiary companies established in Hong Kong were excluded from our study.
Professor Seiki Yamashita and Professor Hiroyuki Nakamura.
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
31
addresses on these listings and directories were used without random sampling. The postal
mail to Japanese subsidiaries was done after a systematic drawing of 1000 addresses in the
Kaigai Shinshitsu Kigyô Sôran, a directory of Japanese MNCs' overseas subsidiaries in the
whole world edited by Tôyô Keizai (2002). Table 2 summarizes total sending by means of
email and post and the return rates:
A return rate (e) is defined as the total return divided by the total number of email and postal
contacts. As the address of the website where our survey was programmed was indicated in our
postal questionnaire, it is difficult to know if an Internet answer is due to an email contact or to a
postal contact. Therefore, we only compute an overall return rate.
2.2. The variables that appear on the factor map
We have designed our questionnaire on the basis of the theoretical background presented in
Section 1 of this paper. More than 100 variables in relation to these mechanisms of control
were specified on our questionnaire. A principal component analysis, and a corresponding
hierarchical classification procedure, will show how most of the specified variables are
combined within specific dimensions of control. In addition, the relative positioning of the
dimensions of control on the factor map helps to clarify their complementary or alternative
use.
The share of capital of the subsidiary held by the MNC (% capital parent com) is generally
the first of the control variables quoted by the relevant literature. The respondents to our survey
mentioned the share that the MNC holds in the subsidiary as a percentage between 0 and 100.
In our sample 6.8% of the cases are minority IJVs, 6.1% are 50 / 50 IJVs, 34.8% are majority
IJVs, which makes 47.7% of IJVs against 52.3% of WOS whose capital is 100% held by the
MNC.
The existence of a subsidiary board of directors seems closely related to the form of the
subsidiary, while nearly 93% of the IJVs in our sample have a board of directors against only
58% of the wholly owned subsidiaries. According to Child and Yan (1999), “one of the rights
typically associated with equity position is the right to appoint members to the IJV's board.
This finds immediate expression in the number of IJV directors an MNC is entitled to appoint
relative to the total size of the board.” Our sample corroborates this statement. The correlation
between the share of capital and the share of the members on the board of directors is as high as
0.65 for foreign parent company members and 0.81 for the local Chinese partners. As these
variables are closely related and redundant, we only included “the share of capital” in the
multidimensional analysis. However, we consider the number of meetings of the board of
directors per year as an effective way of using this control mechanism (no. meetings board). If
the subsidiary does not have a board of directors, we have entered a zero for the number of their
meetings.
Management literature frequently recognizes the importance of appointing own staff members
to key posts in the subsidiary. Therefore, the total number of expatriated managers that the MNC
sends to the subsidiary in China on a long-term appointment (no. of expatriates) is included in the
multidimensional control analysis. However, their total number is not sufficient to explain the
effective control exercised by expatriated managers. The nature of their function must also be
taken into account. We asked in our survey how many expatriated managers and how many local
Chinese managers were assigned to each of the following key management functions: general
manager, accounting, finance, marketing, human resources and production. We computed a
weighted staffing score measuring the quality of the key positions held by expatriated managers
32
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Table 3
Mean values, standard deviations and number of valid observations for each variable
Variable
Mean
Standard deviation
Number of valid observations
Number of expatriates
Share staffing expatriates
Number of management assignments
Number of meetings of the board of directors
Number of documents
Number of formal definitions
Number of job descriptions
Training in the parent country
Training in China
Transfer of knowledge
Share of capital of the MNC
3.23
0.49
3.85
1.47
7.49
4.29
4.20
1.93
2.08
1.92
82.3
3.12
0.26
8.15
1.31
2.92
1.91
2.07
1.63
1.80
1.41
23.0
307
311
279
309
316
316
316
316
316
316
296
(a) and by the local managers (b). To take into account the predominance of the function of
general manager, a rather arbitrary weighting factor of 4 is affected to it as compared to 1 for each
other function. Then the weighted staffing score (share staffing exp. or s.s.e.) is computed as
follows:
s:s:e: ¼ fa=ða þ bÞg
If the score of “share staffing exp.” is equal to one, expatriated managers staff all managerial
functions and local managers none. If the score of “share staffing exp.” is equal to zero, local
managers staff all managerial functions and expatriated managers none. If, for instance, there is
only one expatriate, the general manager, (weighted score for a = 4) and there are three Chinese
managers working for the subsidiary (weighted score for b = 3), then the “share staffing of
expatriates” will be: s.s.e. = {4 / (4 + 3)} = 0.571.
Another variable in the field of human resources is the annual number of management
assignments of short duration, up to 6 months, for managers coming from the MNC head office
(no. mngt assignments).
There is a great diversity of organizational and structural control mechanisms. Geringer and
Hebert (1989) for instance talk about “bureaucratic mechanisms.” Groot and Merchant (2000)
mentioned “administrative means” and “results control by means of performance reports.”
Schaan (1983) lists several mechanisms such as the ability to design the planning process by the
subsidiary, reporting structure, reporting procedures, feedback, plans and budgets. Our survey
captures this diversity by means of three successive questions. First we asked if “the subsidiary
company periodically produced the following documents” followed by a list of thirteen
reporting documents.6 The respondent answered by “yes” or “no” for each document. The
number of documents the subsidiary produces, that is to say the unweighted total number of
positive answers, defines a score that we call “the number of paper documents” (no. of
documents).
6
The following documents were listed: balance sheet, forecast balance sheet, profit and loss statement, interim profit
and loss statement, cash flow statement or finance plan, forecast cash flow statement or finance plan, consolidated
balance sheet, forecast consolidated balance sheet, investment budgets, other budgets, market reports, social report or
report on human resources, other reports.
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
,8
33
share staffing exp.
Factor 2 (14.7% of explained variance)
no. of expatriates
,6 % capital parent com
no. mngt assignments
,4
transfert knowledge
,2
no. meetings board
no. of documents
no. job descriptions
no. formal definitio
,0
train. parent countr
training in China
-,2
-,4
-,6
-,3
0,0
,3
,6
,9
Factor (26.6% of explained variance)
Fig. 1. Principal component analysis defining four groups of control.
Secondly, we asked if the “following functions had been the subject of formal definitions and
written procedures” followed by a list of seven functions.7 The respondent answered by “yes” or
“no.” The number of formal definitions, that is to say the unweighted number of positive answers,
defines a score that we call “the number of formal definitions” (no. formal definitions).
Thirdly, we asked if for the “following functions job descriptions had systematically been
developed” followed by the same list of seven functions. The respondent answered by “yes” or
“no.” The number of functions with written job descriptions, that is to say the number of
positive answers, defines a score that we call “the number of job descriptions” (no. job
descriptions).
In our survey, we separated training and development sessions taking place in the MNC's
parent country from those taking place in the host country, which is China in our case. The
first question in the survey concerning training aimed at finding out if “Chinese employees of
the following categories had been trained in the parent country.” This question was followed
by a list of six categories of employees8 of the subsidiary. The respondents answered first by
“yes” or “no.” The total number of categories of employees receiving training in the parent
country, from 0 to 6, defines a score that we call “training in the parent country” (train. parent
country).
7
The following functions were listed: general management, finance, accounting, marketing-commercial, human
resources, production, other functions.
8
The following categories of employees were listed: directors, other managers, sales representatives, office workers,
foremen, workers.
34
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
* * * HIERARCHICAL CLUSTER ANALYSIS * * *
Dendrogram using Ward Method
Rescaled Distance Cluster Combine
CASE
Label
0
5
10
15
20
25
FORMAL DEFINITIONS
JOB DESCRIPTIONS
No. MEETINGS BOARD
No. OF DOCUMENTS
TRANSFER KNOWLEDGE
TRAINING PARENT COU
TRAINING IN CHINA
No. OF EXPATRIATES
No. MNGT ASSIGNMENT
STAFFING SCORE EXP.
SHARE OF CAPITAL
Fig. 2. Dendrogram obtained by hierarchical clustering (SPSS 12.0).
The second item on training in China was introduced by a question as to whether “during the
past three years European (respectively Japanese) managers or technicians had come to China to
train Chinese employees.” If the answer was positive, the succeeding question identified “which
categories of Chinese employees benefited from the training in China” followed by the same list
of categories of employees9 of the subsidiary. The respondents answered by “yes” or “no.” The
total number of categories receiving training in China, from 0 to 6, defines a score that we call
“training in China” (training in China).
We measured transfer of knowledge by means of the question: “to what extent has the foreign
partner transferred knowledge to the subsidiary company” followed by a list of five fields of
expertise: production, technology, finance, marketing and distribution, human resources
management. The respondent answered on a four-point ordinal scale. We created one single
measure for technology and management expertise transfers as an unweighted mean of the five
ordinal scores. When the MNC transferred no knowledge and the respondent did not answer at all,
the mean score was set at zero.
2.3. Sample description
Table 3 gives the mean values, standard deviations and number of valid observations for each
of the eleven variables that make up the multidimensional analysis of control.
Table 3 requires a short comment. The number of expatriated managers is on average 3.23.
This mean number is consistent with what we found for China in previous research: 3.30 for
Japanese subsidiaries in developing countries (Jaussaud et al., 2000) and 3.01 for Japanese
subsidiaries set up in China only10 (Jaussaud and Schaaper, 2001). As regards short term
9
The same categories of employees were listed: directors, other managers, sales representatives, office workers,
foremen, workers.
10
Computed as a weigthed mean of 3.9 expatriated detached to WFOEs and 2.2 expatriates detached to IJVs and taking
into account the balance between IJVs (47.7% of our sample) and WFOEs (52.3% of our sample).
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
35
management assignments, a high diversity of situations occurs as shown by a standard
deviation more than twice as high as the mean value. The “share staffing expatriates” has a
value of 0.49 which shows a remarkable balance between the staffing of managerial functions
by expatriated and by local managers. The MNCs hold on average 82.3% of the capital. This
mean percentage is growing when related to the 57.0% we have found in previous research for
Japanese subsidiaries in China11 (Jaussaud and Schaaper, 2001) and is approaching the mean
share of 84.1% of capital that Japanese multinationals hold globally in their subsidiaries
worldwide.
3. Construction of a multidimensional model of control mechanisms
As the objective of our research is to get an insight into the complex multidimensional
interaction between control mechanisms, which has scarcely been addressed in literature, we use a
descriptive factor analysis without dependent variables. Our factor analysis is exploratory and
inductive, which means that not all of the initial variables appear on the final factor map. Some
isolated variables which contributed little to the explained variance have been eliminated. The
number of valid observations for each variable varies from 279 to 316, defining 257 listwise valid
observations without missing values. These 257 observations contributed to the construction of a
multidimensional factor plot by SPSS 12.0.
3.1. Main dimensions of control
Fig. 1 shows the first two factors amounting altogether to 43.3% of the total variance. The
third axis, adding 10.8% of explained variance, can be usefully included in the study of the
first factor plan. This third axis shows that the “organizational variables” and the “transfer of
knowledge,” on the one hand, are opposed to the “training” variables and to the “expatriates”
variables, on the other. Thus, “transfer of knowledge” and “organizational structure” are
clearly associated. A hierarchical clustering procedure, based on Ward's method using
Euclidian distance transformation, produces a dendrogram (Fig. 2) and a classification table
(Table 3) clustering the eleven initial variables into four homogeneous groups of control
mechanisms.
The dendrogram (Fig. 2) and the hierarchical cluster analysis (Table 4) summarize the
statistical analysis by identifying the following four groups of control mechanisms: contractual
control, control by human resources sent from the MNC, control via the organizational structure
and control via training and socialization.
The first factor axis opposes contractual control mechanisms, which are most often specified in
the contract setting up the IJV, to all other control mechanisms. The correlation between “the
share of capital” and “staffing of key positions” is significantly positive (r = 0.36) which means
that a high share of capital gives the MNCs the possibility of staffing key management positions
in the subsidiary with their own personnel. Staffing the top management positions of the
subsidiary with representatives from the foreign parent company forms part of the contractual
control group. The “contractual control” mechanisms still remain the most important dimension
of control.
The second factor axis distinguishes three other homogeneous groups of control mechanisms
which are from the top to the bottom of the axis: “control by human resources sent from the
11
The data of that publication were prior to 1997.
36
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Table 4
SPSS clustering 4 groups of control
Variables
Group
% capital parent company
Share staffing expatriates
No. of expatriates
No. of management assignments
No. meetings Board of Directors
No. of documents
No. of formal definitions
No. of job descriptions
Transfer of knowledge
Training in parent country
Training in China
1
1
2
2
3
3
3
3
3
4
4
Group
Variables
1 = Contractual control
Share of capital
Staffing key position
Number of expatriated managers sent to the subsidiary
Number of management assignments of short duration
Number of formal definitions
Number of job descriptions
Number of paper documents
Number of meetings of the board of directors
Transfer of knowledge
Training in the parent country
Training in the host country
2 = Control by human resources sent from the MNC
3 = Control via the organizational structure
4 = Control via training and socialization
MNC,” “control via the organizational structure” and “control via training and socialization.” The
second group of control mechanisms is the “control by human resources sent from the MNC”
which includes “the total number of expatriates” sent to the subsidiary on a long-term basis as
well as “the number of management assignments of short duration (up to six months) per year.”
MNCs obviously mix long-term and short-term appointments of the staff they send to their
subsidiaries (r = 0.36). The “total number of expatriated managers” is also correlated with the
staffing index of key functions (r = 0.25), which means that the more key positions an MNC holds
the more expatriated managers it sends.
If we look more closely at the correlation matrix, we can observe different roles for longterm expatriates and short-term assignments. Firstly, long-term assignments unlike short-term
assignments are well correlated (r = 0.27 against r = 0.11) with “transfer of knowledge,”
which seems to mean that one of the tasks of expatriated managers is to implement and to
supervise the transfer of knowledge. Secondly, expatriated managers are well correlated with
“the number of documents” the subsidiary has to produce, although this difference of
correlation coefficients is smaller between long-term and short-term assignments (r = 0.26
against r = 0.17). Therefore, another important task for expatriates may be to report to the
head office by means of the numerous documents the questionnaire mentioned (balance
sheets, profit and loss statements, budgets, finance plans, market reports, etc.). Thirdly,
short-term and long-term assignments are significantly correlated with “the number of
meetings of the board of directors” (r = 0.20 resp. r = 0.23) which means that the more the
MNC sends staff from the head office, the more the board of directors meet. It seems that
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
37
3,2
Control by the MNC's
human resources
2,6
Contractual
control
2,0
Factor 2
1,4
,8
Organizational
control
,2
Share of capital
-,4
100% WFOE
-1,0
majority JV
-1,6
50/50 JV
Control by
training
-2,2
-3,0
-2,2
-1,4
-,6
,2
1,0
1,8
2,6
minority JV
3,4
Factor 1
Fig. 3. Subsidiaries in the first factor plan labelled by the share of capital that the MNC holds.
expatriated managers frequently hold a position in the board of directors. However, this
reasoning can be inversed: the more the board of directors meet, the more the MNC needs
to send members of the Board to the subsidiary on short- or long-term appointments.
Fourthly, the correlation between “training in China” and “the number of short-term
management assignments” is positive (r = 0.17) but it is not significant for the “number of
expatriates,” which means that training of employees in the Chinese subsidiary is not done
by expatriates, but by people sent by the MNC on short-term assignments. An additional
question on our survey was about “the number of training assignments per year” which is
well correlated with “the number of management assignments” (r = 0.38), which seems to
corroborate this supposition.
Table 5
The mean scores of the four types of subsidiaries on the two factorial axes
100% WOS
Majority JV
50 / 50 JV
Minority JV
ANOVA test of differences of means
Number of observations
Mean score on factor 1
Mean score on factor 2
136
90
16
15
− 0.35
0.38
0.28
0.61
F = 13.8; sign.b0.001
0.43
− 0.32
− 0.84
− 1.11
F = 28.5; sign.b0.001
38
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
3,2
Japan
Europe
2,4
Control by the MNC's
human resources
Contractual
control
Factor 2
1,6
0,8
Organizational
control
0,0
-0,8
-1,6
Control by
training
-2,4
-3,0
-2,0
-1,0
0,0
1,0
2,0
3,0
Factor 1
Fig. 4. Subsidiaries in the first factor plan labelled by the origin of the MNCs.
The third homogeneous group of control variables concerns “control via the organizational
structure” and contains five variables: the number of formal definitions, the number of job
descriptions, the number of paper documents, the number of meetings of the board of directors
and transfer of knowledge. Three of these variables, which are the number of formal definitions,
the number of job descriptions and the number of paper documents have rather high mutual
correlations (respectively 0.36, 0.42 and 0.59) and can be considered as the core of this group.
These three control instruments could be summarized as the “organizational structure” control
group. The “number of meetings of the board of directors” has good correlation with these three
main organizational variables (correlation of resp. 0.32, 0.30 and 0.21) and forms part of this
group.
“Transfer of knowledge” is located halfway between the variables of the “organizational
structure group” and the “human resources sent from the MNC” group. It is significantly
correlated with “the number of expatriates” (r = 0.27) but also with the variables of the “control
via the organizational structure” group, especially with “the number of job descriptions” (r = 0.32)
and “number of meetings of the board of directors” (r = 0.27). Some authors consider transfer of
knowledge as a real instrument of control. Here, we find that transfer of knowledge requires more
strict supervision by means of “job descriptions” and control by the board of directors and is part
of the “organization structure” group of instruments of control. The mean ordinal values for
“production organization” and “technology” transfers appear to be significantly12 higher (mean
12
Student's t-test of differences of means: t = 3,82, sign.b0.000).
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
39
Table 6
The mean scores of Japanese and European subsidiaries on the two factor axes
Japanese subsidiaries
European subsidiaries
Student's T test of differences of mean
Number of observations
Mean score on factor 1
Mean score on factor 2
130
127
0.26
−0.27
T = 4.39; sign. b 0.001
0.18
− 0.19
T = 3.02; sign. = 0.003
values of 2.1) than those for management knowledge transfers like finance, marketing and human
resources management (mean values of 1.6). MNCs transfer more production knowledge than
management expertise to China. An analysis of the correlation coefficients shows that technology
and production organization transfers are highly correlated (r = 0.64). Management expertise
transfers like finance, marketing and human resource management are also rather well associated
with correlation coefficients between 0.43 and 0.52. However, cross correlation coefficients
between, on the one hand, “production organization” or “technology” and, on the other hand,
“finance” or “marketing,” but not “human resource management” are lower with values between
0.24 and 0.31. This shows a dichotomy between technology transfer and management expertise
transfer that could be explained by the initial reason for MNCs to settle in China: to sell on the
domestic market or to relocate production in order to cut costs.
The fourth homogeneous group of control mechanisms is the “training and socialization
group” consisting of two main variables: “the number of categories of Chinese employees
trained in the parent country” and “the number of categories of employees trained in the
host country,” which is China in our case. The two variables of this control group are well
correlated (r = 0.42). Both variables are also correlated with the variables of the “control via
the organizational structure” group, which have values mostly between 0.20 and 0.30. On
the contrary, the correlation with “the transfer of knowledge” is not significantly different
from zero, which is rather surprising since one could easily imagine that the transfer of
knowledge would go together with training, especially in a developing country context such
as China. Overall, these correlations locate the “control via the organizational structure”
group near the “control via training and socialization” group. It seems that formalization
procedures require local employees to be trained in order to learn techniques such as
reporting, budgeting, etc. In our survey, the number of managers and sales representatives,
but not the number of foremen, office workers and the workers who were trained, is largely
correlated with the size of the subsidiary as measured by the turnover, the capital or the total
number of employees.
3.2. Differences in multidimensional use of control mechanisms between WOS and IJVs
A principal component analysis locates statistical observations, which SPSS calls object
scores, in a factorial diagram where similar observations are positioned close together and
dissimilar observations are opposed to each other. Correlation between each of these new
factor axes and the initial variables produces the variables factor plot (Fig. 1), which
contributes to a better understanding of the similarities and differences between the statistical
observations, the subsidiaries in our case. Fig. 3 produces the object scores labelled by the
share of capital that the MNC holds in the subsidiary, distinguishing four typical cases:
100% WOS, majority IJVs, 50–50 IJVs and minority JVs. The arrows show the directions
of the four groups of control mechanisms. The more a subsidiary is located on one single
40
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
arrow, away from the zero point of the plot, the more it uses the mechanisms of control
represented by this arrow. When a subsidiary is located halfway between two arrows, away
from the zero point of the plot, it simultaneously uses both groups of control mechanisms.
On the other hand, when a subsidiary is located in the opposite direction of an arrow, away
from the zero point of the plot, the less it uses the control mechanisms identified by the
arrow. Respondents who are located near the origin of the plot do not use a specific
direction of control mechanisms but rather a mix of all of them.
Table 5 produces the mean scores of the four types of subsidiaries on the two factor axes.
The first factor axis opposes contractual control mechanisms to the other three dimensions of
control that the factor analysis has identified. The mean score of the WOS on the first factor axis
(− 0.35) is significantly different from the mean scores of the three different types of JVs. Fig. 3
very clearly shows that when the subsidiary is a 100% WOS (represented by squares), the MNCs
mostly have recourse to contractual control.
The second factor axis locates, from north to south, “human resources control,” “organizational
control” and “training control.” The mean score of the WOS (0.43) is again significantly different
from the mean scores of the three different types of JVs. Also, the mean score of majority JVs
(−0.32) is significantly different from the mean score of minority JVs (−1.11). This unexpected
result shows that, regarding the use of control mechanisms, there is as much difference between
WOS and JVs as between majority and minority JVs.
The correlation between the “share of capital” and “the number of expatriated
managers” is not significantly different from zero, which means that these two main
instruments of control are neither systematically associated, nor systematically opposed to
each other. As shown by the WOS and some majority IJVs (represented by triangles)
located in the Northeast quadrant of Fig. 3, contractual control is sometimes associated
with control by means of expatriated managers sent to the subsidiary. In return, MNCs use
less organizational and seldom training mechanisms of control when the subsidiary is a
WOS. Conversely, international joint ventures, especially 50 / 50 (represented by stars) and
minority ones (represented by circles), frequently have recourse to training and socialization
control instruments as well as to organizational structure control instruments. This is shown
by the negative correlations between the share of capital and the variables of the training
and the organizational control group. This in turn corroborates Schaan's results on the
basis of MNCs operating mainly in North America, Mexico and Europe (Schaan, 1983,
1988).
3.3. Differences in the multidimensional use of control mechanisms between Japanese and
European subsidiaries
Fig. 4 produces the object scores labelled by the origin of the MNC distinguishing Japanese
subsidiaries from European ones. Table 6 calculates the mean scores of Japanese and European
subsidiaries on the factor axes.
The first factor axis opposes contractual control mechanisms to the other three dimensions
of control that the factor analysis has identified. The mean score of the Japanese subsidiaries
on the first factor axis (+ 0.26) is significantly different from the mean score of the European
subsidiaries (− 0.27). Statistical comparison on the basis of initial variables shows that this is
due to the fact that Japanese MNCs use much more formalised control mechanisms, especially
the board of directors, definitions of functions and job descriptions. Also, Japanese
subsidiaries transfer much more knowledge especially in the field of production and
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
41
technology. This is clearly related to the fact that Japanese MNCs produce in China more
often than do European MNCs.
The second factor axis locates, from north to south, “human resources control,”
“organizational control” and “training control.” The mean score of the Japanese subsidiaries
(0.18) is significantly different from the mean scores of the European subsidiaries (− 0.19).
Again, statistical comparison on the basis of initial variables shows that this is due to the fact
that Japanese MNCs more often use expatriation as a means of control whereas the European
subsidiaries use far more training of local employees. This may result from the fact that the
short distance from Japan to China makes it rather easy for Japanese MNCs to expatriate staff
to that country. Furthermore, according to some of the European managers that we
interviewed, European MNCs, which find it difficult to send expatriates to China, put the
emphasis on training local personnel.
4. Conclusion
The objective of this research was to let a multidimensional model of control emerge by
means of inductive exploratory factor analysis. It aimed to provide a better insight into the
complex interaction between a variety of mechanisms that MNCs implement to exert
effective control over their subsidiaries abroad. To do so, we have studied the specific case
of the Japanese and European subsidiaries in China, taking into account both IJVs and
WOS.
On the basis of academic research on the subject, we identified some twenty instruments
and mechanisms of control that we brought into our exploratory inductive factor analysis.
Eleven of these control mechanisms formed together four main dimensions of control. The
first dimension is a “contractual control” based on the share of capital held by the MNC and
the staffing ratio of key management positions. The second dimension concerns “control by
means of human resources sent from the MNC” which comprises simultaneously the “number
of expatriated managers sent to the subsidiary” on a long term or on a short-term appointment.
The third dimension gathers a series of organizational procedures such as formal definitions,
job descriptions, reporting paper documents, meetings of the board of directors, which we
called “control via the organizational structure.” Rather surprisingly, transfer of knowledge
belongs to this group. Finally, the fourth dimension of control is exerted by means of “training
and socialization” of local managers both in the MNC's parent country and in the host
country.
We tried to detect the interaction between these four main dimensions of control. Contractual
control, especially the share of capital, predetermines the multidimensional interaction with the
other three main dimensions of control. When the subsidiary is a WOS, the MNC uses essentially
contractual control mechanisms, which are sometimes associated with control mechanisms by
means of human resources sent from the MNC's head office. But when the subsidiary is an IJV
the MNC more frequently resorts to training and organizational mechanisms, especially when the
share of capital held by the MNC is weak. This seems to answer Schaan's (1988) question: “how
to control an IJV even as a minority partner.”
One may ask if our conclusions are specific to China-based subsidiaries or if they can be
generalized, at least in other developing countries or in countries in economic transition. We
would like to underline that we have a rather large sample of 316 subsidiaries set up by MNCs
originating from more than eight different countries and two continents. For their empirical
study Yan and Gray (2001) also wonder if “the use of US ventures in China is appropriate for
42
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
testing the theory model that originated from US–China IJVs [.. ], while it may limit the
generalizibility of the findings to IJVs in China or in developing countries.” We agree with
them that “some specific country factors may render part of the study's results specific to
subsidiaries in China; nevertheless, other scholars have documented the similarities of China
ventures to IJVS in other developing countries (Beamish, 1993), so that generalization, with
caution, seems reasonable.”
Our inductive empirical conclusions being exploratory in nature call for additional research.
We intend first to carry out in-dept interviews with a small but well selected number of CEOs in
charge of European or Japanese subsidiaries in China. Such interviews may broaden our statistical
conclusions and provide underlying reasons for implementing alternative and complementary
control structures.
Also, some recent studies (Calantone and Zhao, 2000; Isobe et al., 2000; Yan and Gray, 2001)
suggest that confirmatory causal analysis may link interdependent multidimensional control
structures to their antecedents (such as strategic objectives, protection of strategic resources of
both partners) and to their consequences (such as the achievement of objectives, partners'
satisfaction and the perceived performance of the subsidiary). This is a second direction that we
would like to investigate.
Appendix A
Component
Eigen value
% of explained variance
Cumulative % of explained variance
1
2
3
4
5
6
7
8
9
10
11
2.924
1.620
1.190
1.101
0.777
0.737
0.668
0.575
0.540
0.508
0.359
26.580
14.730
10.814
10.007
7.065
6.698
6.075
5.231
4.912
4.618
3.268
26.580
41.310
52.125
62.132
69.197
75.895
81.970
87.201
92.114
96.732
100
Explained variance of the Principal component analysis.
No. of expatriates
Share staffing expatriates
No. of management assignments
No. meetings of the board of directors
No. of documents
No. of formal definitions
No. of job descriptions
Training in parent country
Training in China
Transfer of knowledge
% capital MNC
Component 1
Component 2
Component 3
Communalities
0.414
− 0.113
0.378
0.583
0.684
0.712
0.652
0.582
0.469
0.424
− 0.345
0.626
0.737
0.373
0.054
0.001
− 0.063
− 0.013
− 0.228
− 0.262
0.349
0.544
0.237
0.016
0.535
− 0.026
− 0.040
− 0.307
− 0.493
0.380
0.442
− 0.403
− 0.076
0.619
0.556
0.569
0.344
0.469
0.605
0.668
0.535
0.484
0.464
0.421
Correlation coefficients between the original variables and the three main factor axes.
Nr of
expatriates
No. of
expatriates
Share staffing
expatriates
No. of
management
assignments
No. meetings
of the board
of directors
No. of
documents
No. of formal
definitions
No. of job
descriptions
Training
in parent
country
Training
in China
Transfer of
knowledge
% capital
MNC
–
0.25
Share
staffing
expatriates
Nr of
management
assignments
0.25
–
Nr meetings
subsidiary board
Nr of
documents
Nr of
formal
definitions
Nr of job
Training
descriptions in parent
country
Training in China
Transfer of
knowledge
% capital
MNC
0.36
0.23
0.26
0.13
0.12
0.13
0.05
0.27
0.02
0.07
− 0.08
−0.05
− 0.03
− 0.07
−0.10
− 0.11
0.07
0.36
0.20
0.17
0.13
0.06
0.17
0.17
0.11
− 0.01
0.32
0.30
0.21
0.23
0.10
0.27
− 0.22
0.42
0.36
0.30
0.21
0.17
− 0.21
0.59
0.28
0.26
0.19
− 0.16
0.22
0.20
0.32
− 0.07
0.42
0.08
− 0.22
–
0.36
0.07
0.23
− 0.08
0.20
0.26
− 0.05
0.17
0.32
0.13
− 0.03
0.13
0.30
0.42
0.12
− 0.07
0.06
0.21
0.36
0.59
0.13
−0.10
0.17
0.23
0.30
0.28
0.22
0.05
−0.11
0.17
0.10
0.21
0.26
0.20
0.42
–
− 0.01
− 0.12
0.27
0.07
0.11
0.27
0.17
0.19
0.32
0.08
− 0.01
–
− 0.05
0.02
0.36
− 0.01
−0.22
−0.21
− 0.16
− 0.07
−0.22
− 0.12
− 0.05
–
–
–
–
–
–
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
Correlation
matrix
Significant
correlations
in bold
character
Correlation coefficients between the original variables.
43
44
J. Jaussaud, J. Schaaper / Journal of International Management 12 (2006) 23–45
(a)
post
German
subsidiaries
British
subsidiaries
French
subsidiaries
Italian
subsidiaries
Spanish
subsidiaries
Other European
subsidiaries
Japanese
subsidiaries
Total
(b)
email
(c = a + b)
contacts
(d)
return
(e = d / Σid)
return %
(f = d / c)
return rate
782
559
1341
37
11.7%
2.8%
462
344
462
29
9.2%
6.3%
437
338
437
60
19.0%
13.7%
–
112
112
11
3.5%
9.8%
–
50
50
4
1.3%
8.0%
–
109
109
22
7.0%
20.2%
48.4%
15.3%
1000
–
1000
153
2681
1512
3511
316
100.0
%
Website
http://perso.wanadoo.fr/jschaaper/
controlde.htm
http://perso.wanadoo.fr/jschaaper/
controluk.htm
http://perso.wanadoo.fr/jschaaper/
controlfr.htm
http://perso.wanadoo.fr/jschaaper/
controlit.htm
http://perso.wanadoo.fr/jschaaper/
controles.htm
http://perso.wanadoo.fr/jschaaper/
controleur.htm
No website
9.0%
Summary of postal and email sending, return rates and websites.
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