Research On Subsidiary Network Effect Of Enterprise Groups Under Parent Company Control

Along with the deepening of reform and opening-up and improvement of market economic system, China's economy has achieved a significant change from a single state ownership as the mainstay of economy form to multiple ownerships as the co-existing development of economy form. Under such circumstances, the enterprise groups has become an important integral part in China's market economy system, moreover, a stable network has been formed by enterprise groups, in which one or more strong large-scale enterprises with investment center features are used as the core, by which a number of the business units that have close relations each other in assets, capital, technology are utilized as the internal network nodes, and through which the bonds such as the arrangement of property rights, personnel control and strategic planning are formed. Compared to the single enterprise form, enterprise groups have more flexibility. Compared to the enterprise cluster network, enterprise groups have stronger stability.The formation of the enterprise groups'network has broken the traditional restrictions of strict hierarchy between the parent company and the subsidiaries both of which are the principal parts of the enterprise groups, and the parent-subsidiary company is more likely to be regarded as a special inter-organization network. Among the relations of network, the parent company and the subsidiary has become a network node, and the parent company and the subsidiaries depend on and influence each other. A subsidiary is a network node among a parent-subsidiary company network or a cross-cutting subsidiary network, whose ability to obtain resources, management ability and decision-making ability decentralize throughout the network rather than concentrate in the parent company. Although the parent company has the hierarchy power, the use and effect of the hierarchy power depends on the role and status which the different subsidiary possesses in the network. Diversity of the subsidiary role and asymmetry of the subsidiary relationship will have an influence on the management degree from parent company and its corresponding control mechanism selection. As a result, the relationship between the parent company and the subsidiaries need to be rebuilt. Based on the parent-mother relationship, the subsidiaries need to be properly controlled by the parent company. At the same time the various activities in the parent-subsidiary company system need to be coordinated and motivated in order to achieve overall growth performance of enterprise groups. From the above analysis we can see that it has been unable to adapt to the developmental needs of the enterprise groups to study the parent-subsidiary company of the enterprise groups only from the perspective of the hierarchy control.In this thesis, the present researches of domestic and foreign enterprise groups are summarized systematically, and the network nature of the enterprise groups is deeply analyzed based on Network Theory. It is designated that the enterprise groups is an organizational structure between the hierarchy structure and the network structure, that the relationship among the subsidiaries of the enterprise groups is a simple network organization and that the parent company can influence behaviors of the subsidiaries and link relations among the subsidiaries by selection of control modes and control level. Furthermore, from the perspective of the subsidiaries, combined with network capital and network knowledge, the"maturity"which is about the measure of overall enterprise groups network variables and the"centrality"which is about the measure of subsidiary network variables are proposed.As the most important organizational form of the enterprise groups network ,the interactive relationship between the subsidiaries has the network effect. Based on the network concept , the basic concept of network effect of the enterprise groups is proposed from both positive and negative dimensions which are synergies and limitations respectively. The formation mechanism of network effect is elaborated, and the analysis is focused on the influencing factors of the enterprise groups'network effect and the influence of the subsidiary network character to network effect. And then, the control behaviors of the parent company are studied from the perspective of the enterprise groups'network, and it is found that control mode and control level from the parent company will influence the network effect of the subsidiaries. The different control modes of the parent company are studied based on the Principal-Agent Theory and Transaction Cost Theory, the control difficulties of the network management of the enterprise groups are analyzed, and the balance point between activeness of the subsidiaries and control behavior of the parent company is analyzed through Game. The liberty decision of the subsidiaries under the control of the parent company is deeply explored in view of the Micro-level of individual, in view of the Meso-level of company and in view of the Macro-level of environment. Network positioning strategy model of the enterprise groups is constructed, and subsidiary network effect model under the control of the parent company is also constructed.Based on the above model, valid survey data are obtained from the listed companies, the influence factors of the control decision-making power of the subsidiaries are analyzed by multiple regression and Logistic regression according to these data, and the subsidiary network effect model is verified by construction equation modeling. Empirical results showed that: (1) the"centrality"of the subsidiary network is higher, the synergetic effect is stronger, but the relationship between the network"centrality"and the restriction effect is the inverse"U"type. (2) The control level of the enterprise groups is higher, the link between the subsidiaries will be added, and the synergistic effect and the operational performance will be promoted. (3) The company in a mature network center can operate with less restrictions and gain more synergistic effects. (4) The synergistic effect can enhance the network performance of the subsidiaries.