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The influence of multinational enterprises on subsidiaries: context matters

Egbe, I.; Adegbite, E.; Yekini, Kemi C.

Authors

I. Egbe

EMMANUEL ADEGBITE EMMANUEL.ADEGBITE@NOTTINGHAM.AC.UK
Professor in Accounting and Corporate Governance

Kemi C. Yekini



Abstract

Purpose: This paper examines how differences in the institutional environment of a multinational enterprise (MNE) shape the role of management control systems (MCSs) and social capital in the headquarters-subsidiary relationship of an emerging economy MNE.
Design/methodology/approach: A case study design was adopted in this research. Data was gathered by means of semi-structured interviews, document analysis and observations. Interviews were conducted at the Nigerian headquarter (HQ) and United Kingdom (UK) subsidiary of the Nigerian multinational enterprise.
Findings: The study found that the subsidiary operated autonomously, given its residence in a stronger institutional environment than the HQ. Instead of the HQ depending on MCSs as a means of coordination and control, it relied on social capital that existed between the HQ and the subsidiary to coordinate and integrate the operation of the foreign subsidiary studied.
Originality/value: The reliance on social capital as a means of coordination and control of the foreign subsidiary in this study is significant, given that previous studies have indicated that multinational HQs normally employ MCSs as a means of control of foreign subsidiaries. Also, while previous studies have suggested that MNEs HQs have better expertise which enables them to design and transfer MCSs to foreign subsidiaries, this study found that such expertise relates to the institutional environment from which the HQ is operating from. Through the lens of institutional sociology theory and social capital theory, these findings directly contribute to the literature on the transference of practices and control systems in accounting and international business literatures.

Citation

Egbe, I., Adegbite, E., & Yekini, K. C. (2018). The influence of multinational enterprises on subsidiaries: context matters. Accounting, Auditing and Accountability Journal, 31(2), https://doi.org/10.1108/AAAJ-06-2016-2608

Journal Article Type Article
Acceptance Date Jun 30, 2017
Publication Date Feb 2, 2018
Deposit Date Dec 7, 2017
Publicly Available Date Mar 29, 2024
Journal Accounting, Auditing and Accountability Journal
Print ISSN 0951-3574
Electronic ISSN 0951-3574
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 31
Issue 2
DOI https://doi.org/10.1108/AAAJ-06-2016-2608
Keywords Emerging multinational enterprises; Multinational enterprises; Management control systems; Social capital; New institutional sociology; Headquarter-subsidiary relationship
Public URL https://nottingham-repository.worktribe.com/output/908415
Publisher URL http://www.emeraldinsight.com/doi/full/10.1108/AAAJ-06-2016-2608

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