Factory performance and decision-making authority between headquarters, expatriates, and local employees in Japanese MNCs in Southeast Asia

  • Kiyohiro OkiEmail author
Original Article


This study aims to clarify the relationship between foreign factory performance and the decision-making authority for manufacturing activities between headquarters, expatriates, and local employees. To investigate these relationships, we conducted logistic regression analysis based on a questionnaire survey of 246 Japanese manufacturing subsidiaries in Southeast Asia and multiple case studies. We found (1) a negative relationship between factory performance and the level of the headquarters’ authority, (2) a positive relationship between factory performance and the level of expatriates’ authority, and that (3) subsidiaries’ operating years and export ratio moderate the relationship between factory performance and expatriates’ authority.


Factory performance Decision-making authority allocation Headquarter–subsidiary relationships Expatriate management Japanese MNCs 



This study was supported by funding under JSPS KAKENHI Grant Numbers JP15H01960, JP16H03666, and JP17K13777.


  1. Abo, T. (1994). Hybrid factory: The Japanese production system in the United States. New York: Oxford University Press.Google Scholar
  2. Ambos, T. C., & Birkinshaw, J. (2010). Headquarters’ attention and its effect on subsidiary performance. Management International Review, 50(4), 449–469.Google Scholar
  3. Ando, N. (2014). The effect of localization on subsidiary performance in Japanese multinational corporations. The International Journal of Human Resource Management, 25(14), 1995–2012.Google Scholar
  4. Asakawa, K. (2001). Evolving headquarters-subsidiary dynamics in international R&D: The case of Japanese multinationals. R&D Management, 31(1), 1–14.Google Scholar
  5. Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders: The transnational solution. Boston: Harvard Business School Press.Google Scholar
  6. Bartlett, C. A., & Yoshihara, H. (1988). New challenges for Japanese multinationals: Is organizational adaptation their Achilles heel? Human Resource Management, 27(1), 19–43.Google Scholar
  7. Belderbos, R. A., & Heijltjes, M. G. (2005). The determinants of expatriate staffing by Japanese multinationals in Asia: Control, learning and vertical business groups. Journal of International Business Studies, 36(3), 341–354.Google Scholar
  8. Birkinshaw, J., & Hood, N. (1998). Multinational subsidiary evolution: Capability and charter change in foreign-owned subsidiary companies. Academy of Management Review, 23(4), 773–795.Google Scholar
  9. Birkinshaw, J., Hood, N., & Young, S. (2005). Subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance. International Business Review, 14(2), 227–248.Google Scholar
  10. Björkman, I., Barner-Rasmussen, W., & Li, L. (2004). Managing knowledge transfer in MNCs: The impact of headquarters control mechanisms. Journal of International Business Studies, 35(5), 443–455.Google Scholar
  11. Brannenn, M. Y., Liker, J. K., & Furin, W. M. (1999). Recontextualization and factory-to-factory knowledge transfer from Japan to the United States: The case of NSK. In J. K. Liker, W. M. Fruin, & P. S. Adler (Eds.), Remade in America: Transplanting and transforming Japanese management systems (pp. 117–153). New York: Oxford University Press.Google Scholar
  12. Brouthers, K. D. (2002). Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, 33(2), 203–221.Google Scholar
  13. Chang, Y. Y., Gong, Y., & Peng, M. W. (2012). Expatriate knowledge transfer, subsidiary absorptive capacity, and subsidiary performance. Academy of Management Journal, 55(4), 927–948.Google Scholar
  14. Chang, S. J., van Witteloostuijn, A., & Eden, L. (2010). From the editors: Common method variance in international business research. Journal of International Business Studies, 41(2), 178–184.Google Scholar
  15. Colakoglu, S., & Caligiuri, P. (2008). Cultural distance, expatriate staffing and subsidiary performance: The case of US subsidiaries of multinational corporations. The International Journal of Human Resource Management, 19(2), 223–239.Google Scholar
  16. Creswell, J. W., & Clark, V. L. P. (2018). Designing and conducting mixed methods research (3rd ed.). Thousand Oaks, CA: Sage Publications.Google Scholar
  17. Dawson, J. F. (2014). Moderation in management research: What, why, when, and how. Journal of Business and Psychology, 29(1), 1–19.Google Scholar
  18. Delios, A., & Bjorkman, I. (2000). Expatriate staffing in foreign subsidiaries of Japanese multinational corporations in the PRC and the United States. International Journal of Human Resource Management, 11(2), 278–293.Google Scholar
  19. Edstrom, A., & Galbraith, J. R. (1977). Transfer of managers as a coordination and control strategy in multinational organizations. Administrative Science Quarterly, 22(2), 248–263.Google Scholar
  20. Eisenhardt, K. M. (1989). Building theories from case-study research. Academy of Management Review, 14(4), 532–550.Google Scholar
  21. Elsey, B., & Fujiwara, A. (2000). Kaizen and technology transfer instructors as work-based learning facilitators in overseas transplants: A case study. Journal of Workplace Learning, 12(8), 333–342.Google Scholar
  22. Fang, Y., Jiang, G. L. F., Makino, S., & Beamish, P. W. (2010). Multinational firm knowledge, use of expatriates, and foreign subsidiary performance. Journal of Management Studies, 47(1), 27–54.Google Scholar
  23. Fayol, H. (1916). Industrial and General Administration (J. A. Coubrough, Trans.). London: Sir Isaac Pitman & Sons.Google Scholar
  24. Fucini, J. J., & Fucini, S. (1990). Working for the Japanese: Inside Mazda’s American auto plant. New York: Free Press.Google Scholar
  25. Gammelgaard, J., McDonald, F., Stephan, A., Tuselmann, H., & Dorrenbacher, C. (2012). The impact of increases in subsidiary autonomy and network relationship on performance. International Business Review, 21(6), 1158–1172.Google Scholar
  26. Gate, S. R., & Egelhoff, W. G. (1986). Centralization in headquarters–subsidiary relationship. Journal of International Business Studies, 17(2), 71–92.Google Scholar
  27. Gaur, A. S., Delios, A., & Singh, K. (2007). Institutional environments, staffing strategies, and subsidiary performance. Journal of Management, 33(4), 611–636.Google Scholar
  28. Geringer, J. M., & Hebert, L. (1991). Measuring performance of international joint ventures. Journal of International Business Studies, 22(2), 249–263.Google Scholar
  29. Gong, Y. P. (2003). Subsidiary staffing in multinational enterprises: Agency, resources, and performance. Academy of Management Journal, 46(6), 728–739.Google Scholar
  30. Gupta, A. K., & Govindarajan, V. (2000). Knowledge flows within multinational corporations. Strategic Management Journal, 21(4), 473–496.Google Scholar
  31. Hair, J. F., Anderson, R., Tathem, R. L., & Black, W. C. (1998). Multivariate data analysis. London: Prentice Hall.Google Scholar
  32. Harzing, A. W. K. (1997). Response rates in international mail surveys: Results of a 22-country study. International Business Review, 6(6), 641–665.Google Scholar
  33. Harzing, A. W. K. (1999). Managing the multinationals: An international study of control mechanisms. Northampton, MA: E. Elgar.Google Scholar
  34. Harzing, A. W. (2001). Who’s in charge? An empirical study of executive staffing practices in foreign subsidiaries. Human Resource Management, 40(2), 139–158.Google Scholar
  35. Hayes, R. H., & Wheelwright, S. C. (1984). Restoring our competitive edge: Competing through manufacturing. New York: Wiley.Google Scholar
  36. Hymer, S. H. (1976). The international operations of national firms: A study of direct foreign investment. Cambridge, MA: MIT Press.Google Scholar
  37. Jaworski, B. J., & Kohli, A. L. (1993). Market orientation: Antecedents and consequence. Journal of Marketing, 57(3), 53–70.Google Scholar
  38. Kawai, N., & Strange, R. (2014). Subsidiary autonomy and performance in Japanese multinationals in Europe. International Business Review, 23(3), 504–515.Google Scholar
  39. Ketokivi, M. A., & Schroeder, R. G. (2004). Perceptual measures of performance: Fact or fiction? Journal of Operations Management, 22(3), 247–264.Google Scholar
  40. Keupp, M. M., Palmie, M., & Gassmann, O. (2011). Achieving subsidiary integration in international innovation by managerial tools. Management International Review, 51(2), 213–239.Google Scholar
  41. Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3), 383–397.Google Scholar
  42. Kopp, R. (1994). The rice-paper ceiling: Breaking through Japanese corporate culture. Berkeley, CA: Stone Bridge Press.Google Scholar
  43. Lam, A. (2003). Organizational learning in multinationals: R&D networks of Japanese and US MNEs in the UK. Journal of Management Studies, 40(3), 673–703.Google Scholar
  44. Landis, R. S., & Dunlap, W. P. (2000). Moderated multiple regression tests are criterion specific. Organizational Research Methods, 3(3), 254–266.Google Scholar
  45. Legewie, J. (2002). Control and co-ordination of Japanese subsidiaries in China: Problems of an expatriate-based management system. International Journal of Human Resource Management, 13(6), 901–919.Google Scholar
  46. Liker, J. K. (2004). The Toyota way: 14 management principles from the world’s greatest manufacturer. New York: McGraw-Hill Companies.Google Scholar
  47. Lindell, M. K., & Whitney, D. J. (2001). Accounting for common method variance in cross-sectional research designs. Journal of Applied Psychology, 86(1), 114.Google Scholar
  48. Luo, X., Slotegraaf, R. J., & Pan, X. (2006). Cross-functional “coopetition”: The simultaneous role of cooperation and competition within firms. Journal of Marketing, 70(2), 67–80.Google Scholar
  49. Negandhi, A. R., & Baliga, B. R. (1979). Quest for survival and growth: A comparative study of American, European, and Japanese multinationals. New York: Praeger.Google Scholar
  50. Newburry, W., Zeira, Y., & Yeheskel, O. (2003). Autonomy and effectiveness of equity international joint ventures (IJVs) in China. International Business Review, 12(4), 395–419.Google Scholar
  51. Nguyen, Q. T. (2011). The empirical literature on multinational enterprises, subsidiaries and performance. Multinational Business Review, 19(1), 47–64.Google Scholar
  52. Nguyen, Q. T., & Rugman, A. M. (2015). Multinational subsidiary sales and performance in South East Asia. International Business Review, 24(1), 115–123.Google Scholar
  53. Oki, K. (2015). Managing internal competition in multinational corporations: The role of home bases. International Journal of Productivity and Quality Management, 15(2), 252–267.Google Scholar
  54. Perrow, C. (1967). A framework for the comparative analysis of organizations. American Sociological Review, 32(2), 194–208.Google Scholar
  55. Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management, 12(4), 531–544.Google Scholar
  56. Pudelko, M., & Tenzer, H. (2013). Subsidiary control in Japanese, German and US multinational corporations: Direct control from headquarters versus indirect control though expatriates. Asian Business & Management, 12(4), 409–431.Google Scholar
  57. Shuler-Zhou, Y., & Schuller, M. (2013). An empirical study of Chinese subsidiaries’ decision-making autonomy in Germany. Asian Business & Management, 12(3), 321–350.Google Scholar
  58. Swink, M., Narasimhan, R., & Wang, C. (2007). Managing beyond the factory walls: effects of four types of strategic integration on manufacturing plant performance. Journal of Operations Management, 25(1), 148–164.Google Scholar
  59. Taggart, J., & Hood, N. (1999). Determinants of autonomy in multinational corporation subsidiaries. European Management Journal, 17(2), 226–236.Google Scholar
  60. Tang, J., & Rowe, W. G. (2012). The liability of closeness: Business relatedness and foreign subsidiary performance. Journal of World Business, 47(2), 288–296.Google Scholar
  61. Tenhiälä, A., & Helkiö, P. (2015). Performance effects of using an ERP system for manufacturing planning and control under dynamic market requirements. Journal of Operations Management, 36, 147–164.Google Scholar
  62. Tran, Y., Mahnke, V., & Ambos, B. (2010). The effect of quantity, quality and timing of headquarters-initiated knowledge flows on subsidiary performance. Management International Review, 50(4), 493–511.Google Scholar
  63. Venaik, S., Midgley, D. F., & Devinney, T. M. (2005). Dual paths to performance: The impact of global pressures on MNC subsidiary conduct and performance. Journal of International Business Studies, 36(6), 655–675.Google Scholar
  64. Womack, J. P., Roos, D., & Jones, D. T. (1990). The machine that changed the worlds. New York: Rawson Associates.Google Scholar
  65. Woodward, J. (1965). Industrial organization: Theory and practice. London: Oxford University Press.Google Scholar
  66. Young, S., & Tavares, A. T. (2004). Centralization and autonomy: Back to the future. International Business Review, 13(2), 215–237.Google Scholar

Copyright information

© Springer Nature Limited 2018

Authors and Affiliations

  1. 1.Faculty of EconomicsThe University of TokyoTokyoJapan

Personalised recommendations