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The relationships between types of network organization and adoption of management mechanisms: an empirical study of knowledge transactions of MNC's subsidiaries in Taiwan

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  • Tseng, C. -H.
  • Yu, C-M. J.
  • Seetoo, D. H. W.

Abstract

This paper examines the relationships of various types of network organizations and the adoption of management mechanisms through the application of network theory. We found that strong relationships exist as described within the four hypotheses by empirically evaluating case studies of MNC subsidiaries in Taiwan. Based on "the knowledge transaction density" observed between an MNC's enterprise group and local firms, the subsidiaries can be classified into three categories of network organization, namely: (1) Self-sufficient, (2) Production- based, and (3) Operation-centered subsidiaries. The literature review suggests that there are four types of mechanisms that MNC headquarters use to control their foreign subsidiaries. These mechanisms are bureaucratic, personnel, performance and cultural controls. This research reports three major findings. Firstly, for Operation-centered subsidiaries, headquarters prefer to adopt two or more management mechanisms simultaneously. Secondly, for Production-based subsidiaries, headquarters prefer to adopt bureaucratic management mechanisms. Finally, for Self-sufficient subsidiaries, headquarters prefer to adopt performance and cultural management mechanisms.

Suggested Citation

  • Tseng, C. -H. & Yu, C-M. J. & Seetoo, D. H. W., 2002. "The relationships between types of network organization and adoption of management mechanisms: an empirical study of knowledge transactions of MNC's subsidiaries in Taiwan," International Business Review, Elsevier, vol. 11(2), pages 211-230, April.
    • Handle: RePEc:eee:iburev:v:11:y:2002:i:2:p:211-230
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    2. Lei, Han-Sheng & Chen, Yung-Shuan, 2011. "The right tree for the right bird: Location choice decision of Taiwanese firms' FDI in China and Vietnam," International Business Review, Elsevier, vol. 20(3), pages 338-352, June.
    3. Michailova, Snejina & Mustaffa, Zaidah, 2012. "Subsidiary knowledge flows in multinational corporations: Research accomplishments, gaps, and opportunities," Journal of World Business, Elsevier, vol. 47(3), pages 383-396.
    4. Schmid, Stefan & Schurig, Andreas, 2003. "The development of critical capabilities in foreign subsidiaries: disentangling the role of the subsidiary's business network," International Business Review, Elsevier, vol. 12(6), pages 755-782, December.
    5. Cerrato, Daniele, 2006. "The multinational enterprise as an internal market system," International Business Review, Elsevier, vol. 15(3), pages 253-277, June.

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