Nghiên cứu thực nghiệm về chiến lược công ty con sử dụng mô hình s-c-o (cơ cấu-thực thi-kết quả)

Nội dung text: Nghiên cứu thực nghiệm về chiến lược công ty con sử dụng mô hình s-c-o (cơ cấu-thực thi-kết quả)

1. AN EMPIRICAL STUDY OF SUBSIDIARY STRATEGIES USING STRUCTURE-CONDUCT-OUTCOME FRAMEWORK NGHIÊN CỨU THỰC NGHIỆM VỀ CHIẾN LƯỢC CÔNG TY CON SỬ DỤNG MÔ HÌNH S-C-O (CƠ CẤU-THỰC THI-KẾT QUẢ) Wann-Yih Wu, Ph.D - Nanhua University, Taiwan Liang-Kuei Chang - National Cheng Kung University, Taiwan Abstract One of the most important issues of multinational operations is the decision making of the global marketing strategy. Managers of multinational corporations (MNCs) must coordinate the implementation of their firms' strategies among various subsidiaries in different parts of the world. In this study, we suggest managers of MNCs to affect local subsidiary marketing strategy by changing the network property among subsidiary, headquarter (HQ) and other internal members. We connect these variables with Structure-Conduct-Outcome (S-C-O) framework and measure the outcome of strategy by financial performance and strategic performance, respectively. A total of 216 Taiwanese sample firms are included in the survey of this study to identify the interrelationships among network structure, conduct of subsidiary and outcome of subsidiary. The results of this study indicated that the comprehensive model is valuable and present that high level of the structure relationship between headquarter and subsidiary will significantly and positively affect subsidiary conduct, and eventually influence on the outcome of the subsidiary. Keywords: Multinational Corporations, Network Structure, Subsidiary Strategy, Performance Tóm tắt Một trong những vấn đề quan trọng trong hoạt động đa quốc gia là việc ra quyết định cho chiến lược marketing toàn cầu. Các nhà quản trị trong các tập đoàn đa quốc gia (MNCs) phải có khả năng gắn kết quá trình thực hiện chiến lược của các công ty con ở nhiều địa điểm khác nhau trên thế giới. Trong nghiên cứu này, chúng tôi đề xuất rằng các nhà quản trị của các MNCs nên tác động đến chiến lược marketing của các công ty con bằng cách thay đổi mạng lưới giữa công ty con, công ty mẹ và các thành viên khác trong tổ chức. Chúng tôi kết hợp các biến này thông qua việc sử dụng mô hình Cơ cấu – Thực thi – Kết quả (S-C-O) và đo lường kết quả chiến lược thông qua hiệu quả tài chính và hiệu quả chiến lược. Mẫu nghiên cứu gồm 216 công ty Đài Loan được lựa chọn trong khảo sát này nhằm xác định mối quan hệ tương hỗ giữa cơ cấu mạng lưới, thực hiện cở công ty con và kết quả hoạt động của công ty con. Kết quả nghiên cứu chỉ ra rằng mô hình toàn diện có giá trị và cho thấy mức quan hệ cơ cấu cao giữa công ty mẹ và công ty con sẽ có các tác động tích cực đáng kể đối với hoạt động của công ty con và qua đó ảnh hưởng đến kết quả kinh doanh của công ty con. Từ khoá: Tập đoàn đa quốc gia, cơ cấu mạng lưới, chiến lược công ty con, hiệu quả hoạt động 5
2. 1. Introduction One of the most important issues of an MNC’s international business operations is its decision on its global strategy. Global strategy refers to the corporate competitive principles that are adopted when multinational corporations compete with global competitors and local firms in worldwide markets. It is comprised of building and operating of the global value chain activities, allocating resources, and establishing subsidiaries all over the world (Yip, 1995; Mudambi & Puck, 2016).Managers of MNC must coordinate the implementation of their firms' strategies among various subsidiaries in different parts of the world with different time zones, cultural contexts and economic conditions to increase their performance. (Bartlett & Ghoshal, 1989; Shumantra & Nohria, 1993; Yip, 1995). Thus, it is important for us to understand the network between headquarter (HQ) and subsidiaries in different country to show how MNCs manager to coordinate between headquarter and subsidiaries to implement appropriate strategy. In the past three decades, a lot of scholars suggest different framework to explain what MNC strategy should be. For example, Prahalad and Doz (1987) use the integration- responsiveness framework to describe MNC strategy. After that, because of the variety between subsidiaries, scholars shift their focus on the subsidiary side. For example, Jarillo and Martinez (1990) use the same framework but identify different types of strategies and roles for subsidiary. Although there are lots of articles discussing about what the MNC strategy is, but few of them use an integrated framework to show the way for HQ manager to implement or affect these strategy or role of the subsidiary. In this study, we use integration-responsiveness framework to identify strategies of subsidiaries and focus on the network aspect to explain the way for headquarter to achieve different strategy for subsidiaries. Ghoshal and Bartlett (1991) and Korzynski (2014) explain that the network relationships can be separated into internal and external networks. For subsidiaries in MNC, external network including the relationships with local competitors, customers, government, academic circles and so on, it is called “embedded relationships” (Uzzi, 1997 &Gammelgaard et al 2016). Internal network is including the relationships with headquarter and other subsidiaries (Ghoshal & Bartlett, 1991) &(Giroud & Scott-Kennel, 2009). Internal network aspect is widely used for several fields, such as supply chain management (e.g., McEvily & Zaheer, 1999) but few scholars apply it for the international marketing field. Besides, it lacks of integrated dimensions to present how internal network affect subsidiary strategy. Thus, in this study, we classify external network into levels of responsiveness of the subsidiary and focus on the internal network of subsidiary to show how headquarter and other subsidiaries affect it, additionally we apply an integrated dimensions which is provided by Geyskens, Steenkamp, and Kumar (1999) in the international marketing field. Geyskens et al. (1999) use meta-analysis method and conclude previous dimensions into three main dimensions, respectively centralization, formalization and dependence. We define centralization as the degree to which subsidiary decision-making authority is concentrated by the headquarter, formalization as the extent to which subsidiary decision making is regulated by explicit rules and procedures, and 6
3. dependence as the extent to which sources from headquarter and other subsidiaries are irreplaceable and the value received by the subsidiary through its relationship with the headquarter and other subsidiaries. Hofer and Schendel (1978)&Ungerer and Cayzer (2016) refer that the purpose of developing and implementing competitive strategy for subsidiary is to improve performance in some measurable way. Performance is widely used to measure the outcome of strategy in the international marketing field (e.g., Taggart, 1999; Tsai, Yu and Lee, 2006). In this study, we separate the construct of performance into two groups, financial performance and strategic performance, to gain a further understanding. Strategic performance refers to a firm’s global market share and competitive position relative to major rivals, while financial performance involves the firm’s efficiency in carrying out global marketing, including its cost position, sales growth, and profitability in the global market (Zou & Cavusgil, 2002). In this article, we try to use S-C-O (Structure – Conduct - Outcome), an integrate framework provided by Molm (1990) and modified by Geyskens et al. (1999), to link up the relationship among internal network structure, subsidiary strategy and performance of subsidiary, which is lack of empirical evidence in the international marketing field. In this study, we use questionnaire survey to prove S-C-O framework.Given that there remains a lot of research questions unanswered in the relationships among internal network structure, subsidiary strategy and subsidiary performance, this study firstly integrates relevant literature and develops a comprehensive research model of international marketing to identify the interrelationships among relevant research constructs. Secondarily, this study also empirically tests the research model through conducting survey research. 2. Literature review 2.1 Network Structure The conception of “network” comes from social science and inter- organizational theory (Benson, 1975; Yang et al. 2016). There are three levels in network structure relationship including people to people, people to organization, and organization to organization. This research is focused on the third relationship – “organization to organization”. In the past three decades, there are a lot of articles discussing about the definition of “network”, and it changed by the time. Thorelli (1986) refers it as “two or more organizations involved in long-term relationships”. Johanson and Mattsson (1987) &Achcaoucaou (2016) consider that it is composed by inter-dependency corporations, the force of cooperation is from the interaction between network members. Jarillo (1988) refers that network is formed for some objectives. Johanson and Mattsson (1988) propose that network model explains activities and globalization of multinational corporations strongly. Ghoshal and Bartlett (1991) refer that network is common between organizations, it could be sorted into internal and external networks in multi-national corporations(MNC). Besides, they regard multinational corporations as inter- organizational network that is 7
4. composed of geographically -separated oversea subsidiaries. The loose link gives the subsidiaries chances of developing specific resources by themselves. Kamann and Strijker (1991) address that network is including all the activities between organizations. The extensive definition makes any organization that have interaction relationships would be included in the same network. Uzzi (1997) uses “embedded relationships” instead of “network” to mention the interactions between organizations, but the definition is almost the same. Uzzi defines embedded relationships as two individual are close or have special relationships, he thoughts “embedded relationships” is one of the strategic resources that will affect organization’s abilities and performances. Thus, one of the characteristic of MNC is that the foreign subsidies are embedded in the local network (Ghoshal & Bartlett, 1991; Forsgren, Johanson, & Sharma, 2000). Development of new product design and new manufacturing procedure of overseas subsidiaries somehow relies on supply chain members (Andersson, Forsgren & Holm, 2002). Therefore, foreign subsidiaries in different countries have different local network relationships. In fact, different network resources show the different competitive advantages for the foreign subsidies. For foreign subsidiaries, external networks are including local competitors, suppliers, customers, government, and academic circles. For the exchange of resources and information, subsidiaries should develop network relationships with the local network members. Thus, it is important for MNCs to understand the structure of network. Several scholars propose different dimensions to measure network structure. 2.2 Global Marketing Activities Contingency theory (Ginsberg & Venkatraman, 1985)& (Lin, 2013) tells us that “there is no best way”, and it is constant for MNC managers to fit strategy to situation underlies a number of theoretical approaches. Therefore, the configuration/co-ordination paradigm (Porter, 1986) and integration-responsiveness grid (Prahalad & Doz, 1987) are produced. The integration-responsiveness framework has been proven to be a robust framework both for describing and analyzing the strategies of international firms at corporate and subsidiary level. In this article, we focus on how internal network affects global marketing conduct; therefore, integration-responsiveness framework is used to analyze global marketing activities. The integration-responsiveness framework is developed by Prahalad and Doz individually and jointly in the 1987. It is one of the most important strategy models and has been evaluated by Jarillo and Martinez (1990), Roth and Morrison (1990), Johnson Jr. (1995), Taggart (1997, 1998) and Tsai et al. (2006) with empirical evaluation. The framework uses two dimensions to visualize strategy. According to the two dimensions, international firm can adjust its position and attempts to create and sustain competitive advantages.Besides, Taggart (1997) also draws up the importance of alternative variables. While multivariate analytical techniques using the integration and responsiveness constructs may yield a classification of subsidiaries, and alternative variables are used to test the validity of any such derived classification. Taggart (1997) collects the variables and make a summary. 8
5. 2.3 Interrelationship among Research Constructs 2.3.1 The S-A-O framework The S-A-O framework is suggested by Molm (1990), he uses the power respect to explain about this framework. He proposes that structural power in networks affects exchange outcomes indirectly, through strategic action. Strategic action affects outcomes directly, independent of structure.Following the framework suggested by Molm (1990), Geyskens et al. (1999) make a deeper explain about this framework using marketing channels, he refers that channel structure refers to the patterned or regularized aspects of relationships between channel participants; conduct refers to strategies and patterns of behavior that emerge in a relationship; and outcomes refer to relational, qualitative outcomes that result from the relationship. Ozsomer and Prussia (2000) andLin (2013) claim that the growth of overseas markets and global competition pressure MNCs to develop and implement a global strategy through a centralized structure (CS). This centralized control enables the HO to ensure that subsidiary strategies to align with the global strategy to reach the global goals, which supports the structure-strategy-performance causal sequence.In this study, follow the S-A-O framework and explain network structure using the definition by Geyskens et al. (1999), they are centralization, formalization, dependence. For strategic action, we use the I-R framework which is been wide use for the MNCs, the dimensions are integration and responsiveness. For Outcome, we follow the definition made by Zou and Cavusgil (2002) and separate it into two dimensions; they are Strategic performance and financial performance. 2.3.2 Interrelationships between Network Structure and Global Marketing Strategy A study of 102 German manufacturing subsidiaries located in the British Isles supports the view that integration is a key strategy dimension at this level of the MNC, and identified two mutually orthogonal dimensions (Taggart & Hood, 1995). These are decision-making autonomy of the subsidiary and market scope. Further evidence comes from a study (Taggart, 1996) for 123 multinational manufacturing subsidiaries located in Scotland in which the key determinants are found to be market scope, coordination and integration; decision-making autonomy and local supply linkages were also identified as important.Ozsomer and Prussia (2000) use the concept from “process school” to prove the relationship among network structure and global marketing strategy. He mentions that Prahalad and Doz (1987) theorize that HO management which is defined the structural context for the subsidiary consistent with its own strategic objectives, which in turn shapes a strategy for the subsidiary. It supports the structure-strategy causal sequence. Ozsomer and Prussia (2000) and Androniceanu et al. (2015) also mention that in decentralized structures, subsidiary managers have greater decision-making autonomy; managers learn to run semiautonomous or autonomous country units. Moreover, subsidiary managers acting within decentralized structures gain general skills, engage in active environmental exploration, and consequently adapt their marketing strategies to the local environment. Kim et al. (2003)and Udalov (2014) suppose that in the context of MNBs, centralization means that decision-making authority lies in the business head office, where 9
6. there exists a more complete understanding of various units and activities scattered around the world. This mode will be most effective in integrating geographically dispersed units to assist in achieving the benefits of global scale, scope, and learning (Egelhoff, 1988). It has also been referred to as the centralizing strategy of control. Based upon the above statements, hypothesis 1 and 2 are developed as follows: H1: The levels of centralization will significantly positive influence the levels of integration. H2: The levels of centralization will significantly negative influence the levels of responsiveness. Robert and Arne (1999) use the opportunism aspect to illustrate the relationship, he supposed that formalization is to identify complementary tasks and responsibilities of the network actors, and it use specific descriptions of obligations to highlight the complementary responsibilities and objectives of network actors and explicitly identify appropriate actors’ behaviors tend to exacerbate the level of opportunism to answer the need from other actors. Kim et al. (2003) suppose that formalization relies on standardized work procedures, rules, policies, and manuals. It is effectiveness to make a specific process of activities into a set of identifiable procedures, rules, and formulae. It can help MNCs to integrate their business functions globally in which functional activities are performed across units. This is consistent with coordination by standardization and bureaucratic control (Baliga and Jaeger, 1984). Based upon the above statements, hypothesis 3 and 4 are developed as follows: H3: The levels of formalization will significantly positive influence the levels of integration. H4: The levels of formalization will significantly negative influence the levels of responsiveness. Kim et al. (2003) draw up the important of people and information to integration and responsiveness. He argues that firms use people to achieve coordination and control of business functions across borders, and he calls that is one kind of integration, and it is not easy to substitute because it facilitates the process of sharing vision, values and norms, and of building trust among members (Gupta and Govindarajan, 2000). Because of different local culture, there is less response to the local environment where there is more dependency on the HQ. He also argues that the use of information systems provides another way for integrating business functions. It has been called coordination through information systems and control through data management (Doz and Prahalad, 1981; Gilardi et al. 2014) Andreu and Enrique (2005) use satisfaction view to explain the relationships. They mention that in dependence relationships, firms tend to present a more open and flexible structure, less decentralization in decision making in the relationships. It means, the better the source firm meets the needs of the target firm, the greater the satisfaction with the source firm. For the MNC subsidiary, the more subsidiary meets the needs (dependence) 10
7. on the HQ or other subsidiaries, the better satisfy subsidiary has, and the higher level of integration between internal networks. On the country, the more subsidiary meets the needs (dependence) on the HQ or other subsidiaries means the less subsidiary meets the needs on the local external networks, including local competitors, academic circles and so on. The less satisfaction derives form local external networks, the worst drive for the subsidiary to response the local network. Based upon the above statements, hypothesis 5 and 6 are developed as follows: H5: The levels of dependence will significantly positive influence the levels of integration. H6: The levels of dependence will significantly negative influence the levels of responsiveness. 2.3.3. Interrelationships between Global Marketing Strategy and Outcomes Birkinshaw, Morrison, and Hulland (1995) use 12 industries to prove the relationship between global marketing strategy and outcomes. They used the aspect from Porter (1986) that business performance is contingent on the fit between environments and conduct (strategy) and found that the global integration of business activities is positively associated with performance. Zou and Cavusgil (2002) use 23 global industries and 434 Bus through D&B’s America’s Corporation Families and The Directory of Corporate Affiliations to verify the relationship between global marketing strategy and outcomes. They found the global marketing strategy including the concept of integration and responsiveness has a positive relationship with both strategic and financial performance, and this is the two variables we used to measure the dimension of performance. Tsai et al. (2006) mention that all the Taiwanese MNC affiliates will fall into three strategic roles which is segmented according to two dimensions of global strategy: global integration and local responsiveness. Moreover, a subsidiary’s strategic role influence on the subsidiary’s business performance significantly. Besides, the variables to measure subsidiary’s performance are including strategic performance, such as market share objectives, and financial performance, such as ROI, sales growth objectives. Based upon the above statements, hypothesis 7 and 8 are developed as follows: H7: The levels of integration will significantly positive influence the levels of performance, including strategic performance and financial performance. H8: The levels of responsiveness will significantly positive influence the levels of performance, including strategic performance and financial performance. 3. Rresearch design and methodology 3.1. The Conceptual Model The purposes of this study are firstly to integrate relevant literature and develop a comprehensive research model of international marketing to identify the interrelationships among relevant research constructs. Secondarily, the study will also empirically test the research model through conducting survey research. The research model of this study is 11
8. shown in Figure 1. Figure1 The Research Model of this Research 3.1. Construct Measurement For the purposes of this study, the following six major constructs are operationalized in this study: (1) centralization, (2) formalization, (3) dependence, (4) integration, (5) responsiveness, and (6) performance. When possible, items previously found valid and reliably by other researchers were employed in existing or slightly modified form. 3.2. Questionnaire Design As discussed above, a 81-item survey questionnaire was developed to obtain the responses from the graduate students of several major universities in Taiwan about their opinions on various research variables. The questionnaire of this study is consisted of six constructs: “centralization (16 items),” “formalization (15 items),” “dependence (16 items),” “integration (12 items),” “responsiveness (15 items),” and “performance (7 items).” A preliminary version of this questionnaire was designed by the author and discussed with the Ph.D. students and thesis advisor. The questionnaire was pretested through a pilot study by the IMBA students of National Cheng Kung University. Questionnaire items were revised based upon the results of the pilot study before being put into the final form. The detailed contents of the questionnaire, including the statement of the questionnaire items and the ranging or the scale were shown in Appendix. 4. Results and Descriptive 4.1. Characteristics of respondents Table 1 shows the basic attributes of the respondents, including nine major items in the study: (1) gender, (2) age, (3) industry (4) department, (5) position, (6) enterprise history, (7) labor number of the enterprise, (8) capital of the enterprise, (9) global locations of the enterprise. It shows that more than 47% of the respondents are male. More than 45% of the respondents are less than 30 years old. More than 40% of the respondents are working in the service industry. About 17% of the respondents work in the marketing department. About 28% of the respondents are middle-level supervisor. The enterprise history less than 10 years is more than 37%. More than 31% of the enterprise labors are 12
9. more than 1000 labors. About 30% of the enterprise have a capital of investment of 10 million NT or less. Finally, more than 52% of the enterprise global locations they work only locate in one nationality. Table 1 Characteristics of the Respondents (n=216) 4.2. Structure Equation Model (SEM) The purpose of this study is to find out the relationships among centralization of the network, formalization of the network, dependence of the network, integration of the subsidiary, responsiveness of the subsidiary and performance of the subsidiary. For such an objective, structure equation model is employed to test the interrelationships of all the variables in the entire model. The proposed structural equation model is shown in Figure 2. Before evaluating the structural or measurement models, the overall fit of the model to ensure that the model should be evaluated. In this study, five indices were used to test the fit of the model. The first one was the chi-square test, the essential for the nested 13
10. model comparison. The chi-square value of 93.543 with 72 degrees of freedom is statistically significant at the 0.045 significance level. Figure 2 Structure Equation Model of this Study The rest of the fit indices adopted in this study were the root mean square residual (RMR), the goodness of fit index (GFI), and the adjusted goodness of fit index (AGFI). The smaller the RMR is, the better the fit of the model. A value of 0.05 is suggested as a close fit (Arbuckle & Wothke, 1999). GFI and AGFI will not be influenced by the sample size explicitly and they were adopted to test how much better the model fits than no model at all. A very good fit of research model would require GFI and AGFI to be higher than 0.9 (Arbuckle & Wothke, 1999). The quality of the apriority alternative models should rely on the fit indices. However, it does not necessarily mean that one model is superior or the corrected causal model. Another important criterion for the quality of the model is the plausibility criterion (Joreskog & Sorbom, 1994). It means that the path coefficients in the model adhere to the general theoretical conception and to the hypotheses. Therefore, a model that fits the data well, but with many unsupported hypothesized paths, cannot be defined as correct. Hence, the fit indices and the theoretical predictions should be taken into consideration.As the overall goodness of fit is promising, it is encouraged to further identify the magnitudes and significance of the path structural coefficients of the model. The results also show that dependence of the network has significant impact on integration of the subsidiary and responsiveness of the subsidiary( =0.427,  =- 0.464), which is consistent with our hypotheses 5 and 6. Finally, the performance of subsidiary is significant influenced by the integration of subsidiary and responsiveness of the subsidiary( =0.697,  =0.263), which is consistent with our hypotheses 7 and 8. These results seem to indicate that the interrelationships among centralization, 14
11. formalization, dependence, integration, responsiveness and performance are significant specifically. 5. Conclusions and suggestions 5.1. Research Conclusions The major objective of this study is to identify the interrelationships among centralization of the network, formalization of the network, dependence of the network, integration of the subsidiary, responsiveness of the subsidiary and performance of the subsidiary. Based on the results of this study, several conclusions can be drawn. The first conclusion is that there are significant relationships among centralization of the network, integration of the subsidiary and responsiveness of the subsidiary. It indicates that centralization of the network tends to positively impact on the integration of technical skills and product, and has a negative impact on the level of localization, responsiveness to customers and responsiveness to competitors. In addition, the results also show that the levels of indicators for centralization of the network tend to significantly influence the levels of integration of the subsidiary including integration of technical skills and integration of product. The second conclusion is that there are significant relationships among formalization of the network, integration of the subsidiary and responsiveness of the subsidiary. It indicates that formalization of the subsidiary tends to positively impact on the integration of technical skills and product. In addition, the results also show that the levels of indicators for formalization of the network tend to significantly influence the levels of integration of the subsidiary including integration of technical skills and integration of product, and also tend to significantly influence the levels of responsiveness including level of localization, responsiveness to customers and responsiveness to competitors.The third conclusion is that there are significant relationships among dependence of the network, integration of the subsidiary and responsiveness of the subsidiary. It indicates that dependence of the network tends to positively impact on the integration of technical skills and product, and has a negative impact on the level of localization, responsiveness to customers and responsiveness to competitors. In addition, the results also show that the levels of indicators for dependence of the network tend to significantly influence the levels of integration of the subsidiary including integration of technical skills and integration of product, and also tend to significantly influence the levels of responsiveness including level of localization, responsiveness to customers and responsiveness to competitors. In summary, the conclusions we described before indicate that the network structure between headquarter and subsidiary has a significant influence on the conduct of subsidiaries, including the degree of integration in the subsidiary and the degree of responsiveness in the subsidiary. Several scholars use the integration - responsiveness framework to segment subsidiary into several roles. Jarillo and Martinez (1990) segment them into three groups; they are receptive subsidiary, active subsidiary and autonomous subsidiary. Taggart (1997) explains that there is the fourth group in the integration – responsiveness framework and it is quiescent subsidiary. But Tsai et al. (2006) find that 15
12. there are only three subsidiary roles in Taiwan, they are the same with Jarillo and Martinez (1990). Active subsidiaries are highly integrated and responsive. Autonomous Subsidiaries have high responsiveness but low integration. Respective Subsidiaries have low responsiveness but high integration. It means, for the MNCs managers, if they are entering a new market or trying to change the role of local subsidiary, they can affect the subsidiary role by changing the network relationships between headquarter and the subsidiaries. Managers can increase their level of centralization, formalization and dependence to become respective subsidiary. They can achieve the goal by increasing the level of headquarter control, formalizing the subsidiary structure and value activities, increasing the dependency of HQ finance and so on. On the opposite, managers can decrease their level of centralization, formalization and dependence to become autonomous subsidiaries. They can also shape the subsidiary into active subsidiary by moderating the level of centralization, formalization and dependence into middle level.Finally, the fourth conclusion in this study is that the integration and responsiveness have a positive and significant effect on a subsidiary’s performance, including strategic performance and financial performance. Our findings help substantiate the fundamental relationship between subsidiary conduct and subsidiary performance, and offers empirical support for the fundamental conduct-performance link in the global market context. It reaffirms the fundamental tenet of the global marketing literature and provides an empirical foundation for further research in the global marketing field. The findings in this study have several implications for MNCs’ managers in global industries. Since integration of the subsidiary, including skills and product, and responsiveness of the subsidiary, including response to customer, competitors and level of localization, affects subsidiary’s performance positively and significantly, the following actions could help managers to gain benefits from it. First, managers should carry on activities or conduct in the key regions or market carefully. The previous study suggests that the key regions or market tend to be those where major customers and / or competitors are located and where new technologies and product are produced. Operating in the key markets or areas supports MNCs the opportunity to response the customer needs and monitor the competitors to counter their moves with timely action.Second, Zou and Cavusgil(2002) refer that the key regions or markets of the world are now tightly interlinked. Managers can integrate their promotional mix and skills in these markets which can enable MNCs to gain worldwide efficiency. It does not represent that subsidiaries should not adapt their advertising themes, appeals, or media choice to the conditions of the local markets. Instead, it implies that a firm should adapt its promotional efforts only when it is necessary to respond to local customer preferences, media use patterns, and advertising regulations. Third, a key determinant of performance in global markets lies in manager’s ability to establish common needs among the customer segments worldwide so that core product can be accepted. A standardized product will provide MNCs with substantial efficiency in the global operations, and will bring scale economics, synergies and efficiencies (Yip,1995). In addition, it can simplify worldwide planning and afford the firm’s brands a consistent image with global customers. 16
13. 5.2. Research Suggestions Several limitations of this study should be noted and pointed to the need for future research. First, because of the limitation of sampling resources, the composition of the sample means that the generalization of present findings needs further testing. Future research might direct more resources to data collection to increase the sample size and consider different types of firms or industries.Second, the research design is not longitudinal, and all information was obtained from survey in school. Therefore, the causal attribution of relationships is relatively weak. Further work should consider adopting a longitudinal design to future test the causal order of the factors. Third, because only subsidiaries based in the Taiwan were surveyed, the findings may have limited generalization to other countries. For this reason, further research should test the applicability of this structure in other countries. Any limitation factors (culture, social, political, and economic) should be investigated.Fourth, in this study, we test how network structure influences performance through subsidiary strategy, future research should take the direct relationship between network structure and performance into account. Fifth, we analyze network structure through three constructs, but there may exist any interrelationships between these constructs in the international marketing field, further research needs to test the independency of these constructs. Finally, although certain internal organization attributes were examined here, they are not exhaustive. Building on our theoretical framework, further research should explore the relevance of other external and internal factors for the MNCs global marketing strategy and performance. Additionally, it should be investigated that the possibility of the globalization potential of an industry may moderate the relationship between global marketing strategy and MNCs performance. REFERENCES Achcaoucaou, F., Miravitlles, P. & Fidel, L.D. (2017). Do we really know the predictors of competence-creating R&D subsidiaries? Uncovering the mediation of dual network embeddedness. Technological Forecasting & Social Change, 116, 181–195. Andersson, U., & Forsgren, M., & Holm, U. (2002). The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation. Strategic Management Journal, 23(11), 979-997. Andreu, Blesa B. & Enrique, Bigné B. (2005). The effect of market orientation on dependence and satisfaction in dyadic relationships. Marketing Intelligence & Planning, 23(2), 249-265. Androniceanu, A., Risteaa, B. & Uda, M.M. (2015). Reference Leadership competencies for project based school management success Armenia. Procedia - Social and Behavioral Sciences, 182, 232–238. Arbuckle, J.L. & Wothke, W. (1999). Amos 4.0 user’s guide. IL: SmallWaters Corporation. 17
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