Katharina Kretschmer Performance Evaluation of Foreign Subsidiaries With a foreword by Prof. Dr. Stefan Schmid GABLER EDITION WISSENSCHAFT
Contents Figures Tables XVII XIX 1 Introduction 1 1.1 Performance Evaluation of Foreign Subsidiaries as a Management Problem 1 1.2 Research Background and Research Questions 2 1.3 Outline of the Study 4 2 Defining Performance Evaluation and Its Role as Control Mechanism 7 2.1 Performance Evaluation as Control Mechanism 7 2.1.1 Control 7 2.1.2 Performance as Achievement of Legitimate Goals 12 2.1.3 Evaluation as Control Step '. 16 2.2 The Concept of Performance Evaluation 17 2.2.1 The Role of Performance Evaluation within the Control Mix 18 2.2.2 The Content of Performance Evaluation 20 2.2.3 The Process of Performance Evaluation 22 2.3 An Integrative Concept of Performance Evaluation 24 3 Review of the Literature on Performance Evaluation of Foreign Subsidiaries.27 3.1 Objectives and Methodology of the Literature Review 27 3.2 Descriptive Contributions on Performance Evaluation of Foreign Subsidiaries 30 3.2.1 Topics of Descriptive Contributions 31 3.2.2 Differentiation of Performance Evaluation in Descriptive Contributions 32 3.2.3 Methodologies and Research Design of Descriptive Contributions 34 3.3 Explanatory Contributions on Performance Evaluation of Foreign Subsidiaries 35 3.3.1 Topics of Explanatory Contributions 35 3.3.2 Differentiation of Performance Evaluation in Explanatory Contributions 36 3.3.3 Methodologies and Research Design of Explanatory Contributions 40 3.4 Conclusions and Implications of the Literature Review 42 XV
4 The Research Framework 45 4.1 A Contingency Framework of Role-Specific Performance Evaluation 45 4.1.1 Contingency Theory as Theoretical Background 45 4.1.1.1 Introducing Contingency Theory 46 4.1.1.2 Excluding Other Organization Theories 48 4.1.2 Developing a Contingency Framework of Role-Specific Performance Evaluation 52 4.1.2.1 General Contingency Framework of Role-Specific Performance Evaluation 52 4.1.2.2 Selection of Role Typologies to Specify the Contingency Factor 54 4.1.2.3 Identification of Two Relevant Role Typologies 59 4.1.2.4 Specified Contingency Framework of Role-Specific Performance Evaluation 64 4.1.3 Review of the Contingency Framework 65 4.2 Propositions on Role-Specific Performance Evaluation 68 4.2.1 Performance Evaluation of Subsidiaries in Bartlett and Ghoshal's Role Typology 69 4.2.1.1 Predictions for the Strategic Importance of the Market 69 4.2.1.2 Predictions for the Competence of the Local Organization 72 4.2.1.3 Propositions on the Impact of the Subsidiary Roles on Performance Evaluation 74 4.2.1.3.1 Strategic Leader 74 4.2.1.3.2 Contributor 75 4.2.1.3.3 Implementer 77 4.2.1.3.4 Black Hole 78 4.2.2 Performance Evaluation of Subsidiaries in Gupta and Govindarajan's Role Typology 79 4.2.2.1 Predictions for Knowledge Inflow 80 4.2.2.2 Predictions for Knowledge Outflow 81 4.2.2.3 Propositions on the Impact of the Subsidiary Roles on Performance Evaluation 84 4.2.2.3.1 Integrated Player 84 4.2.2.3.2 Global Innovator 86 4.2.2.3.3 Local Innovator 87 4.2.2.3.4 Implementor 88 XVI
The Empirical Study 91 5.1 Research Design 91 5.1.1 Rationale for a Qualitative Case Study Approach 91 5.1.2 The Multiple Case Design 93 5.1.2.1 Introduction on the Case Design 93 5.1.2.2 The Selection of Business Units as Cases 94 5.1.2.3 The Selection of Subsidiaries as Units of Observation 96 5.2 Operationalization of the Elements of the Contingency Framework 99 5.2.1 Operationalization of the Role Typologies 99 5.2.1.1 Operationalization of Bartlett and Ghoshal's Subsidiary Roles 100 5.2.1.1.1 Background of the Classifying Dimensions 100 5.2.1.1.2 Strategic Importance of the Market 102 5.2.1.1.3 Competence of Local Organization 104 5.2A.2 Operationalization of Gupta and Govindarajan's Subsidiary Roles.. 107 5.2.2 Operationalization of the Performance Evaluation Concept 111 5.2.2.1 Operationalization of the Role of Performance Evaluation within the Control Mix 111 5.2.2.2 Operationalization of the Content of Performance Evaluation 114 5.2.2.3 Operationalization of the Process of Performance Evaluation 116 5.3 Data Collection 118 5.4 Data Analysis 122 5.5 Review of the Research Approach 129 Empirical Findings 133 6.1 Empirical Findings on "Eucom" 133 6.1.1 Introducing Eucom and Its Subsidiaries 133 6.1.2 The German Subsidiary of Eucom 135 6.1.2.1 The Roles of the German Subsidiary - Contributor and Global Innovator 136 6.1.2.2 The Evaluation of the Performance of the German Subsidiary 139 6.1.3 The Spanish Subsidiary of Eucom 148 6.1.3.1 The Roles of the Spanish Subsidiary- Implementer and Local Innovator 148 6.1.3.2 The Evaluation of the Performance of the Spanish Subsidiary 152 6.1.4 The Finnish Subsidiary of Eucom 158 6.1.4.1 The Roles of the Finnish Subsidiary - Strategic Leader and Global Innovator 158 6.1.4.2 The Evaluation of the Performance of the Finnish Subsidiary 162 XVII
XVIII 6.1.5 Discussion of the Performance Evaluation at Eucom 170 6.1.5.1 Performance Evaluation of the Eucom Subsidiaries in Bartlett and Ghoshal's Role Typology 170 6.1.5.1.1 Performance Evaluation of the Strategic Leader 170 6.1.5.1.2 Performance Evaluation of the Contributor 172 6.1.5.1.3 Performance Evaluation of the Implementer 173 6.1.5.2 Performance Evaluation of Eucom Subsidiaries in Gupta and Govindarajan's Role Typology 174 6.1.5.2.1 Performance Evaluation of the Integrated Player 174 6.1.5.2.2 Performance Evaluation of the Global Innovator 175 6.1.5.2.3 Performance Evaluation of the Local Innovator 176 6.1.6 Standardization versus Role-Differentiation in Performance Evaluation at Eucom 177 6.2 Empirical Findings on "Gloneer" 181 6.2.1 Introducing Gloneer and Its Subsidiaries 181 6.2.2 The Gloneer Subsidiary "Germany L" 186 6.2.2.1 The Roles of Germany L - Strategic Leader and Local Innovator...186 6.2.2.2 The Evaluation of Germany L's Performance 190 6.2.3 The Gloneer Subsidiary "USA L" 198 6.2.3.1 The Roles of USA L - Strategic Leader and Local Innovator 198 6.2.3.2 The Evaluation of USA L's Performance 199 6.2.4 The Gloneer Subsidiary "Switzerland" 206 6.2.4.1 The Roles of "Switzerland" - Contributor and Local Innovator 206 6.2.4.2 The Evaluation of "Switzerland's" Performance 210 6.2.5 The Gloneer Subsidiary "Germany S" 216 6.2.5.1 The Roles of Germany S - Contributor and Local Innovator 216 6.2.5.2 The Evaluation of Germany S' Performance 218 6.2.6 The Gloneer Subsidiary "Sweden" 224 6.2.6.1 The Subsidiary "Sweden" - Contributor and Local Innovator 224 6.2.6.2 The Evaluation of "Sweden's" Performance 226 6.2.7 The Gloneer Subsidiary "Germany P" 231 6.2.7.1 The Roles of Germany P - Contributor and Global Innovator 232 6.2.7.2 The Evaluation of Germany P's Performance 235 6.2.8 The Gloneer Subsidiary "Great Britain" 241 6.2.8.1 The Roles of "Great Britain" - Implementer and Local Innovator 241 6.2.8.2 The Evaluation of "Great Britain's" Performance 244 6.2.9 The Gloneer Subsidiary "China" 250
6.2.9.1 The Roles of "China" - Black Hole and Implementor 251 6.2.9.2 The Evaluation of "China's" Performance 255 6.2.10 The Gloneer Subsidiary "India" 263 6.2.10.1 The Roles of "India" - Black Hole and Implementor 263 6.2.10.2 The Evaluation of "India's" Performance 265 6.2.11 Discussion of the Performance Evaluation at Gloneer 270 6.2.11.1 Performance Evaluation of the Gloneer Subsidiaries in Bartlett and Ghoshal's Role Typology 271 6.2.11.1.1 Performance Evaluation of the Strategic Leaders 271 6.2.11.1.2 Performance Evaluation of the Contributors 274 6.2.11.1.3 Performance Evaluation of the Implementer 277 6.2.11.1.4 Performance Evaluation of the Black Holes 277 6.2.11.2 Performance Evaluation of Gloneer Subsidiaries in Gupta and Govindarajan's Role Typology 279 6.2.11.2.1 Performance Evaluation of the Global Innovator 280 6.2.11.2.2 Performance Evaluation of the Local Innovators 281 6.2.11.2.3 Performance Evaluation of the Implementors 283 6.2.11.3 Standardization versus Role-Differentiation in Performance Evaluation at Gloneer 284 6.3 Comparison of the Role-Specific Performance Evaluation at Eucom and Gloneer 289 7 Contributions, Limitations and Implications for Future Research 293 Appendices 301 References 331 XIX