Estructura del código contable

43

Tsai, 2001; Soo et al., 2002). In production, site competence goes up with the presence of more technical experts such as engineers, specialists in relevant process technologies, highly qualified technicians, experienced operators, quality management professionals, programmers, or other qualified or educated staff (Ferdows, 1997b). The next section presents subsidiary capabilities.

44

i.e. server capabilities. Research on server capability development is timely because there are increased numbers of western companies in emerging markets that are changing role from an offshore plant to a server plant in order to tap into the potentials (e.g. Table 1.1) of such markets. A contingency perspective is adopted in order to investigate the relationship between the context of firms and the way activities are organized within, firms (Ghoshal and Nohria, 1997; Forsgren, 2008). The contingencies considered in this study are discussed below.

2.8.2 Possible role of contingencies Strategy

The strategy of a subsidiary means its position relative to its environment and is aimed to draw the organization closer to its long-term goals (Slack et al., 1998). According to Teece et al. (1997), strategy involves selecting and committing to long-term paths or trajectories of competence development. Hayes and Wheelwright (1984) suggest that a strategy involves identifying “ends and ways” (business objectives and strategy) and developing “means” (resources and capabilities) through which the selected ends and ways can be achieved. The definition of MNC adopted in this study follows Root (1994), i.e. an MNC represents a business enterprise, which engages in foreign production through its subsidiaries located in several countries and/or implements business strategies in production, marketing, finance and staffing that transcend national boundaries. While the mode of operation is determined by MNC strategy regarding the degree of externalization of activities and the level of localization of activities in each country, the mandate is largely impacted by the degree of integration of activities across different countries.

Industry

The industry considered for this research concerns ISIC Rev. 3.1 Division 29. This industrial division deals with the manufacturing of general-purpose machinery, components and special applications, including:

 Motors and engines (except electric motors), turbines, pumps, compressors, valves and transmissions.

 Ovens, burners, lifting and handling equipment, cooling and ventilation equipment, other general-purpose machinery (e.g. packaging equipment, weighing machines and water purification equipment).

 Agricultural machinery, machine tools, machinery for other specific industrial

45

purposes (e.g. for metal production, building and civil engineering, mining or the manufacture of foodstuffs, textiles, paper, printed matter, plastic and rubber products.

 Domestic appliances (electrical and non-electrical).

HQ

HQ or parent company dictates resource sovereignty as well as strategy definition across various parts of the value chain, including the subsidiaries. HQ receives information on product improvements, new product development, service needs and other customer demands from various subsidiaries and decides on the subsidiary to perform a specific activity based on the resources and investments in that subsidiary.

HQ may exhibit its authority to influence a subsidiary’s mandate but if the subsidiary is autonomous, then the subsidiary dictates its own mandate.

Market characteristics

Market characteristics of the case subsidiaries are geographic and product related, that is, most of the products are specific for the local, i.e. Chinese market. The ease or difficulty of a subsidiary to take a specific initiative depends on the strategic “starting point” for that subsidiary. The starting point for initiative taking may vary. For example, a subsidiary may be a significant business unit with total operations in its own right, focused on serving a local market in addition to a number of global responsibilities such as, for example, market based server entities. In contrast, a subsidiary could also be a firm that manufactures a component for its home-base finishing plants without involvement in the parent’s R&D, engineering, quality, marketing and sales functions (Delany, 2000). The strategic starting point for initiative-taking in each instance is different. To understand such differences, a useful initial approach is to consider three

“markets” where subsidiaries may add value: the internal market, the local market, and the global market.

Internal market

The internal market is made up of the internal customers, suppliers and competitors within the MNC. The internal market may be a regional or global internal market dependent on the subsidiary and the parent organization structure. In the case of many manufacturing or development center subsidiaries there may be little contact with the actual “end customer” in local or international markets. All the key interactions are within the internal market. The subsidiary may get most of its supplies from other

46

component manufacturing subsidiaries of the parent; its output may go to other manufacturing subsidiaries or to the national sales subsidiaries of the parent. Frequently, these subsidiaries may find themselves in competition with sister sites for corporate business. While initiatives in the local and global markets are usually more important, as the corporation must earn its revenue externally, the internal market is a differentiating feature of the environment of the subsidiary. Furthermore, much of the activity in the internal market relates to competition for better external customer value opportunities. Regardless of its level of strategic independence, the subsidiary must understand its internal market and meet its internal customers' needs.

Local market

The local market is the national or regional end-customer market in which the subsidiary is located. It will be the most suitable environment for a marketing/sales subsidiary distributing products manufactured by its parent in other countries or products manufactured locally. It must deal with local customers, competitors (some of whom may be subsidiaries of other MNCs), corporate and local suppliers, and regulatory bodies.

Global market

The global market could be the entire world end-customer market or specific regional niches of that market. The mandates of subsidiaries serving the global market extend beyond national boundaries. These subsidiaries may be using other national subsidiaries of the parent company to distribute, market and sell their products, which increases the complexity and significance of the internal corporate market facing the subsidiary.