AUTONOMÍA DEL NIÑO – NIÑA

Following Tangpong et al., (2015), we emphasized the importance of the timing of the first response and explored its effect on the probability of recovery (versus exit). Specifically, we asked What factors determine the timing of a response and what role does the timing of responses play in the effectiveness of the chosen response in increasing recovery and survival prospects?

Our findings suggest that some subsidiaries may receive earlier headquarter attention which may aid them in their recovery, since it can decrease the risk of being stuck in inaction. The factors that may lead to more headquarter attention can be summarized as communication channels which enhance the frequency of communication between the headquarters and its subsidiary. We find that especially when the subsidiary has an R&D focus, it receives earlier headquarter attention. Also, if the GM was Japanese, the response was more likely to be administered earlier rather than later. This may be due to fewer cultural and language barriers between the Japanese headquarters and the subsidiary, and thus a more trusting flow of information. We are not aware of any studies that have examined the determinants for the timing

of a response and indeed, Tangpong et al. (2015) call for exploring this aspect further. Our study contributes an initial look at what may impact the timing of a response.

To better assess the notion of the timing of a response, we then explored the impact of the timing on the probability of recovery versus exit. We combined arguments about time compression diseconomies (Dierickx & Cool, 1989) with arguments about the detrimental effects of inaction (Weitzel & Jonsson, 1989) and hypothesize an inverted U-shape in the relationship between the timing of a response and the probability of recovery versus exit. We did indeed find support for this hypothesis, suggesting that very early responses to subpar performance (i.e. in the first two years of subpar performance) may be counterproductive. This qualifies and extends Weitzel and Jonsson’s (1989) recommendation to respond as early as possible. Indeed, extensive due diligence may be required before an appropriate response can be administered. Further, this finding may be interpreted in support of cutting the first two years of subpar performance sequences from analyses, since they may contain “knee-jerk” reactions which are not good indicators of the effectiveness of a thoroughly orchestrated response.

We then qualified this finding of a curvilinear relationship by introducing the moderating effect of response type and GM replacement. Regarding response types, we found that different responses are time-sensitive to differing degrees. In particular, while increases in commitment may be more beneficial to the likelihood of recovery than decreases in commitment, we also find that the timing of a decrease in commitment response matters more than it does for an increase in commitment. If, as our findings suggest, a retrenchment was conducted very early on or very late, the outcome may indeed be counterproductive to recovery rates. Thus, including the aspect of the timing of a response may be an important contingency factor that can advance the debate on whether retrenchment is a necessary aspect to successful turnarounds or not. We also advance

Tangpong et al.’s finding that earlier retrenchment actions appear to be better than later ones by considering the entire sequence range for this analysis and thus exposing a curvilinear effect.

Regarding the replacement of the top leadership during subpar performance, we build on contingency arguments put forward in the extant literature. We particularly build on Chen and Hambrick (2012) who note that GM replacements per se do not hold much value for the subsidiary’s turnaround but that certain contingency factors (fit or misfit in their study) may explain when GM replacements are a valuable approach. We extend their perspective by offering the timing of GM replacement as a contingency factor. Our findings suggest that only when the GM replacement was done very early did it have a productive effect; beyond that, GM replacements were counterproductive to recovery rates. We also suspect, however, that the replacement of a GM at the subsidiary level will be less impactful than the replacement of a CEO at the corporate level, as the decline/turnaround literature suggests. This may potentially be due to the fact that a replacement of the GM at a foreign subsidiary has a different (less visible) effect than replacing the corporate-level CEO in the declining firm’s headquarters. Future research could explore this notion further.

The construct of time is multidimensional and in our study, we assessed the aspect of a timing of the first response on the probability of recovery versus exit. It would be interesting to explore other dimensions of time in future research, such as the specific ordering of responses. For instance, is a retrenchment followed by a strategic response most effective (Schmitt & Raisch, 2013) or should this be reversed or simultaneous? What contingencies affect the effectiveness of the ordering of events? Although Schendel & Patton (1976) called for research on the ordering of responses, not much progress has been made in this regard.

In sum, the findings from this thesis may expand current knowledge about organizational decline/turnaround in the international context in several directions. Furthermore, we offer a theoretical framework which could act as guidance when examining the subpar performance phenomenon in an international context.

In particular, using a resource orchestration perspective, we devised three dimensions “identifying”, “responding”, and “synchronizing” through which mechanisms could be categorized. This approach allows us to view the phenomenon less from a phenomenon-driven perspective as much of the existing literature has done (Trahms et al., 2013) and more from a theory-driven perspective. Moreover, we moved the concept of time into the foreground. Most extant research has treated time as a latent construct but responses to subpar performance are time-critical - thus, temporal concepts such as timing, duration, ordering, and synchronization should be explicitly modeled (Tangpong et al., 2015). It would be interesting to see future research follow resource orchestration from its initiation to its completion. Although some studies on resource orchestration exist (e.g. Chadwick et al., 2015), a qualitative study following the process of resource orchestration in the case of addressing subpar performance sequences at foreign subsidiaries would be enlightening.

The findings from this thesis thus contribute most strongly to two main literatures within this realm: 1) regarding the organizational decline/turnaround literature, this thesis expands the field of vision from a domestic, corporate-level or business-level perspective to an international, headquarters-subsidiary perspective. While some notions of that literature hold (e.g. the importance of retrenchment when slack is present), other constructs were not even considered in that literature yet (e.g. regional headquarter role, MNE network, cultural distance). Moreover, this expansion allows for a different take on devising a theoretical framework to guide the

analysis. 2) Regarding the international divestiture literature, this thesis offers a more comprehensive analysis of a subsection of the literature, which considers subpar performance as one predictor of divestitures. By focusing only on those subsidiaries that are performing poorly, divestitures can be seen as one type of response and the perspective opens up for other types of responses.

Other literatures may be tangential to this thesis as well. For instance, the literature on organizational resilience touches upon exploring what makes some firms weather a crisis and others to fold under pressure. Perhaps the model devised in this thesis allows for a more international perspective of influencing factors and mechanisms that are at play in such situations.