The Relationship between the Control Level of Foreign Subsidiaries and Performance in the Chinese Market

• Published in: Journal of distribution science Vol. 13; no. 8; pp. 15 - 25
• Main Authors: Byounggoo Kim, 김규배
• Format: Journal Article
• Language: English
• Published: 한국유통과학회 01.08.2015
• Subjects: 경제학
• ISSN: 1738-3110; 2093-7717
• DOI: 10.15722/jds.13.8.201508.15

Purpose – There is a lack of research on how much corporate control is sufficient for effective subsidiary business-related decision making. To address this research gap, this study analyzes the impact of the level of control of a Korean corporation’s headquarters on its overseas subsidiary performance. Research design, data, methodology – The study’s sample comes from the Overseas Korean Business Directory of KOTRA. A multiple regression analysis empirically confirmed the relationship between the headquarters level of control over the subsidiaries and their performance. Results – The results show that the greater an organization’s headquarters control over strategic issues, the greater the subsidiary’s non-financial performance. However, quick decision-making through decentralization promotes the rapid selection of successful new products that can provide a competitive advantage. Conclusion - This study shows that the impact of control levels on subsidiary performance depends on the type of control involved. Specifically, while low levels of control over operational issues had a positive (+) influence on subsidiary non-financial performance, high control levels led to improved non-financial performance with regard to strategic issues among the subsidiaries. KCI Citation Count: 0