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An investigation of wholly‐owned foreign subsidiary control through transaction cost economics theory
Author(s) -
Giacobbe Francesco,
Matolcsy Zoltan,
Wakefield James
Publication year - 2016
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12118
Subject(s) - multinational corporation , transaction cost , subsidiary , asset specificity , context (archaeology) , control (management) , archetype , survey data collection , management control system , empirical research , exploratory research , empirical evidence , internalization theory , database transaction , industrial organization , business , economics , microeconomics , computer science , management , finance , sociology , database , art , mathematics , statistics , philosophy , anthropology , literature , biology , paleontology , epistemology
This paper investigates the management control systems used by multinational corporation headquarters to control wholly‐owned foreign subsidiaries. Our theory development is based on transaction cost economics. First, we conduct a series of exploratory interviews, providing an insight into the context, and second, we provide empirical evidence based on cross‐sectional survey data. Our results indicate that activity traits (uncertainty, asset specificity and post hoc information impactedness) have significant implications on control choices, in particular the control archetype combinations chosen by headquarters, although not all results are consistent with theory predictions. Our findings are supported by extensive alternative testing.

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