Journal Name: Asian Business & Management: September 2007, Volume 6, Number 3
European and Japanese Multinational Companies in China: Organization and Control of Subsidiaries (pp223–245)
Jacques Jaussaud (Universite de Pau et des Pays de l'Adour, Avenue du Doyen Poplawski BP 575, 64012 PAU CEDEX, France) and Johannes Schaaper (Université de Poitiers, France)
The control of their subsidiaries by multinational companies (MNCs) is regarded in academic literature as a multidimensional process. Specificities of Japanese, as compared to American and European, management practices have quite often been emphasized, including in the field of international management. On the basis of a large-scale survey, this contribution investigates the organization and control of subsidiaries in China by Japanese and European MNCs. Only a small number of significant differences appear, regarding mainly expatriation policies and training of local staff. Such differences seem to be mainly related to geography (Japan being close to China, while Europe is not) and to the delocalization strategies of Japanese MNCs over the last 10 years; and less so to cultural differences, as is often suggested.
Keywords: China, control, MNCs, subsidiaries, organization, strategic management
Exploring the Relationship Between Trust and Control — An Empirical Analysis of Sino-German Joint Ventures (pp247–263)
Alexander Mohr (Management School, Bradford University, Emm Lane, Bradford BD9 4JE, UK)
Trust and control are recurring themes in the research on international joint ventures (IJVs). So far, however, researchers have mainly focused on analysing either trust or control and its association with IJV performance. Whereas one group of authors views trust as crucial for performance, a different group suggests that, in order to be successful, partners should increase their control over the IJV to ensure that their goals for the IJV are achieved. If both groups are right, IJV partners should try to exert control and establish a trustful relationship at the same time to maximize the likelihood of success. This conclusion, however, leads to the counter-intuitive result that firms can simultaneously control and trust their IJV partners. This study presents three alternative views regarding the nature of the relationship between trust and control and tests them against data gathered by means of a questionnaire survey among managers of Sino-German joint ventures.
Keywords: trust, control, international joint ventures
Market Access or Efficient Production: Why Did South Korean Outward Direct Investment Persist After the Crisis? (pp265–284)
Matthew S Winters (Department of Political Science, Columbia University, 420 West 118th Street, New York, NY 10027, USA)
After the 1997–1998 Asian Financial Crisis, South Korean outward direct investment (ODI) remained at approximately the same level as before the crisis. What explains this remarkable persistence of outward investment, concurrent with a seven-point drop in GDP? After considering contemporary theories of foreign direct investment, this article posits that there are multiple explanations, which are contingent on the size of the firm involved in ODI. For the largest South Korean conglomerates — the five biggest chaeb — foreign investment was a way of opening markets to compensate for declining sales at home, whereas other firms used foreign investment to take advantage of production efficiencies made possible by the financial crisis's impact in other countries. In relation to South Korea, China represented an investment destination that could absorb both types of investment. The empirical evidence is suggestive, but not conclusive.
Keywords: Asian Financial Crisis, South Korea, foreign direct investment, market access
Foreign Direct Investment in China: Its Impact on the Neighboring Asian Economies (pp285–301)
Dilip K Das (School of Business, Conestoga College, 299 Doon Valley Drive, Kitchener, Ontario, Canada N2C 2R9)
China's vertiginous growth after 1978 has not only enhanced its regional presence, but also influenced regional institutions and economic structure. Regional economies, in particular the NIAEs and the ASEAN-4, have been significantly affected, particularly in their trade and investment patterns. This article focuses on the far-reaching domestic and regional ramifications of China's emergence as a large trading economy. China's WTO accession and trade expansion should have favorable welfare implications for both China and the regional economy. Vertical specialization was a key causal factor behind China's strong increase in regional imports; importing for processing, and exporting the final product, has been growing steadily. Foreign direct investment (FDI) has been a vital element of China's reform and growth strategy, and foreign-invested enterprises (FIEs) has played a crucial role in China's growth and globalization endeavors. FDI flows to neighboring Asian economies have been influenced by China's success. However, closer scrutiny reveals that China, the second largest economy in Asia, did not receive a level of FDI incompatible with the size and performance of its economy.
Keywords: China growth, trade expansion, neighboring economies, vertical expansion, foreign direct investment
Performance Impact at the Board Level: Corporate Governance in Japan (pp303–326)
Ralf Bebenroth (Research Institute for Economics and Business Administration (RIEB), Kobe University, 2-1 Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan) and Li Donghao (Graduate School of Business Administration, Kobe University, 2-1 Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan)
The purpose of this paper is to investigate performance impact at board level in the corporate governance of Japanese companies. We have investigated the size and composition of boards (with reference to outside directors and auditors), and applied this to a set of 821 Japanese manufacturing companies. We found evidence that board size does not matter, but a higher ratio of outside directors/outside auditors appears to relate to better company performance. As a second step, we put Japanese companies into three groups, 'traditional companies' (without outside directors), 'new Japanese companies' (which have appointed outside directors) and, as a third group, companies who apply the 'US-style' committee system. Traditional Japanese companies showed the weakest and US-style Japanese companies the strongest performance. The results are important as they suggest that Japanese companies can benefit from a high ratio of outside directors and outside auditors. In addition to this, our second area of research suggests that Japanese companies considering getting financed by the capital market should introduce the US-style system, as this clearly outperformed the other categories.
Keywords: corporate governance, boardroom, JUS-style corporate governance, outside ratio, board size
(This journal is available online: http://www.palgrave-journals.com/abm)
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