Controlling newly established foreign subsidiaries in transition economies

Publication Type:
Conference Proceeding
2009 AFAANZ Conference Website, 2009, pp. 1 - 29
Issue Date:
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This paper invest igates the management control system choices exercised by a multinational corporation headquarters to control a newly established wholly owned foreign subsidiary located in a t ransition economy. Specifically t his paper aims to identif y what the core ch allenges of establishing and operating subsidiaries in transition economies are and how these are addressed t hrough the mult inational headquarters' management control systems. A case study is conducted of an Eastern European based subsidiary owned and controlled by a multinational corporation origi nating from South-East Asia. The challenges of operating the subsidiary in the transition economy are reported, which primarily ent ail cultu ral differences, lack of experience, lack of external integration and recruitment issues. Preliminary f indings indicate that the management control system primarily util ises personnel and results controls, which appear to address operational and management challenges.
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