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Foreign Direct Investment in the UK 1985–1994: The Impact on Domestic Management Practice
Author(s) -
Child John,
Faulkner David,
Pitkethly Robert
Publication year - 2000
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/1467-6486.00175
Subject(s) - german , subsidiary , foreign direct investment , business , sample (material) , quality (philosophy) , control (management) , greenfield project , parent company , management control system , investment (military) , accounting , demographic economics , multinational corporation , economics , political science , management , finance , politics , geography , law , philosophy , chemistry , archaeology , chromatography , epistemology , macroeconomics
Foreign direct investment (FDI) into the UK has grown considerably in recent years. US, French, German and Japanese companies have generally accounted for the largest share of this FDI. In addition to greenfield and expansion investment, a major vehicle for inward FDI has been the acquisition of UKcompanies. This paper examines whether nationally distinct approaches to management were introduced, following acquisition, among a sample of 201 UK subsidiaries of French, German, Japanese,US and UK companies. It provides data on the extent of changes and the post‐acquisition influence of the new parent, comparing changes between the four foreign nationalities and a UK control group. The study indicates that the process of being acquired and controlled by a foreign parent company was often followed by significant changes in management practice. Some changes were common to all acquisitions, including those by UK companies. A shift towards performance‐related rewards and a stronger quality emphasis in operations are two examples. In addition, there was also evidence of effects which differed between nationalities. These conformed to accepted characterizations of national management practice in the case of Japanese and US acquirers, but less so in the case of French and German acquisitions. The findings suggest that present views of French and German management practice require further investigation.