| This study draws on control and international business literatures to develop a framework by which subsidiary performance and purpose may be related to the extent of control and mechanisms of control that parent companies exercise over their foreign subsidiaries. Hypotheses resulting from this framework were tested through a survey of U.S. subsidiaries in Mexico and of their U.S. parent companies.; First, survey data was collected from a total of 86 Mexican subsidiaries of U.S. multinationals. Then the parent firms of the 76 subsidiaries which had identified themselves were contacted, and responses were obtained from 43 of these. The problems of common method variance were avoided by comparing the responses of subsidiary managers to either the responses of their parent company supervisors or data obtained from the American Chamber of Commerce--Mexico. Responses were evaluated using standard parametric and nonparametric techniques.; Parent evaluations of subsidiary performance were found to be inversely related to the extent of control that parent companies exercise over these subsidiaries. Only one of the three predicted relationships between subsidiary control and mechanism of control and only one of three predicted relationship between subsidiary manager nationality and control were supported, however.; A series of semi-structured interviews with Mexico City subsidiary managers were used to shed light on the results obtained. A common theme along all interview respondents was pride in autonomy. In addition, the interviews provide indications of several variables missing from the model at both the business and personal levels.; Directions for future research are offered. First, external validity can be improved through additional single location studies. Second, methods to better account for time effects are suggested. Third, several missing variables have been identified and must be accounted for. Fourth, sampling over broad geographical areas would increase sample size and allow an accounting for industry effects. Finally, some means of predicting which subsidiaries will be high or low performers is the ultimate goal of this stream of research. The most important contribution of this study is the identification of obstacles that must be overcome on the path to that goal. |
