Research On The Selection Mechanism Of Management Control Mode Between Parent Company And Subsidiary Company

Along with the fast development of enterprises,enterprise management has also made great progress.At present,more and more enterprises adopt decentralized management control mode,but there are still some successful enterprises using centralized management control mode.Looking back on the history of enterprise development,centralized management control mode has flourished for a while in the past years,as if all the studies show that enterprises should be highly decentralized enterprises in the future.All this leads to a delicate question,why centralized management control mode can keep alive at present?According to contingency theory,which management control mode an enterprise adopts depends on its environment.But in practice,two enterprises with similar control environment sometimes adopt opposite management control mode.What factor leads the enterprise to adopt decentralized or centralized management control mode?How does enterprise's control environment affect the selection of management control mode?What is the path and mechanism of selection?The answer to these questions is the key to successful selection of the management control mode.The essence of management control mode selection between parent company and subsidiary company is the distribution of power,the target of management control mode selection is to select a reasonable power allocation mechanism and improve the efficiency of power exercise.The exercise of power can not be separated from the support of knowledge,but the distribution of power and knowledge between parent company and subsidiary company is unbalanced.The parent company owns decision-making power,control power and other powers due to the ownership relationship,while,the subsidiary company reserves a lot of knowledge because it is more familiar to the operation.In order to match power with knowledge,one way is to transfer knowledge from subsidiary company to parent company and adopt centralized management control mode.However,the transfer of knowledge from subsidiary company to parent company is affected by knowledge attributes,transfer channels,transfer willingness of subsidiary company and absorption capacity of parent company,so this way will be constrained by the knowledge transfer cost.Another way is to delegate power to subsidiary company and adopt decentralized management control mode.The problem faced by this way is that there are inconsistent goals between subsidiary company and parent company.For the sake of own interests,subsidiary company may not exercise power completely according to the intentions of parent company,so this way will be constrained by agency cost.From the discussion,we can see that the selection of management control mode is constrained by both knowledge transfer cost and agency cost,but knowledge transfer cost and agency cost are not exogenous,they are endogenous to the control environment of parent company and subsidiary company.The control environment will affect the knowledge transfer cost and agency cost between parent company and subsidiary company,and then affect selection of management control mode.Therefore,the framework of management control mode selection mechanism between parent company and subsidiary company can be expressed as"control environment-knowledge transfer cost/agency cost-management control mode".According to the theoretical framework,this paper discusses the selection mechanism of management control mode between parent company and subsidiary company from the perspective of subsidiary company,analyses the mediation effect of knowledge transfer cost and agency cost between subsidiary company's environmental characteristics and management control mode parent company adopted.Based on 317 valid questionnaires from Dalian,Jinan,Yantai,Zhengzhou,Qingdao,Zaozhuang and other cities,this paper empirically analyses the paths of management control mode selection using AMOS 21.0 software and structural equation model.Research chapters are arranged as follows:Chapter 1,introduction.This chapter introduces the paper's research background and significance,objectives and ideas,contents and methods,and possible innovations.Chapter 2,literature review.Focusing on the research questions and objectives,this chapter reviews four parts of literature,including research on the types of management control mode,research on influencing factors of management control mode,research on selection mechanism of management control mode,and research on the impact of knowledge transfer cost and agency cost on the allocation of decision-making power.This helps to clarify the connotation and essence of management control mode,summarize the influencing factors and its respective influences on management control mode,evaluate the value of further study on the selection mechanism of management control mode,and judge the feasibility of studying the selection mechanism of management control mode based on knowledge transfer cost and agency cost.Chapter 3,theoretical foundation and theoretical analysis.On the basis of the existing research,this chapter constructs the theoretical framework of this paper,including the theoretical framework of the overall impact of subsidiary company's environmental characteristics on the selection of management control mode and the theoretical framework of mechanism analysis and path analysis of the impact of subsidiary company's environmental characteristics on the selection of management control mode.Through them,different theories in the study of management control mode selection are integrated into the same analytical framework,which is the foundation of the theoretical analysis in the following chapters.Chapter 4,research variables and scales test.This chapter gives the definition of all research variables and their measurement scales.Based on 317 valid questionnaires collected,confirmatory factor analysis is carried out on management control mode,knowledge transfer cost,agency cost,resource,management capability,network and culture,which is the foundation of empirical analysis in the following chapters.Chapter 5,the overall impact of subsidiary company's environmental characteristics on the selection of management control mode.Taking the environmental characteristics of subsidiary company as the research object,this chapter divides the control environment of subsidiary company into four factors:resource,management capacity,network and culture,discusses the overall impact of different factors on the selection of management control mode between parent company and subsidiary company.Chapter 6,the impact of knowledge transfer cost and agency cost on the selection of management control mode.Based on the theory of knowledge transfer cost and agency cost,this chapter discusses the influence of knowledge transfer cost and agency cost on management control mode.In addition,the moderation effect between knowledge transfer cost and agency cost is also taken into considerationChapter 7,the path and mechanism of subsidiary company's environmental characteristics on the selection of management control mode.On the basis of the previous two chapters,this chapter uses knowledge transfer cost and agency cost as mediation effect analysis tools to explore the path and mechanism of subsidiary company's environmental characteristics on the selection of management control mode.Specifically,this chapter discusses how subsidiary company's environmental factors such as resource,management capacity,network and culture affect the selection of management control mode through the intermediary path of knowledge transfer cost and agency cost.Chapter 8,conclusions and enlightenments.This chapter summarizes the main research conclusions of this paper and its contribution to the theoretical research and practical development of management control mode selection,expounds the enlightenment of the research conclusions on enterprise management,analyses the limitations of the research,and puts forward the future research prospects.The main conclusions are as follows:First,the environmental characteristics of subsidiary company will influence the management control mode adopted by the parent company.Based on existing research,the control environment of subsidiary company can be divided into four factors:resource,management capacity,network and culture.The resource level of subsidiary company has a negative impact on the management control mode,if a subsidiary company has a large amount of resources,the parent company tends to adopt a centralized management control mode.The management capability of subsidiary company has a positive impact on the management control mode,if a subsidiary company has good management capability,the parent company tends to adopt a decentralized management control mode.The influence of subsidiary company's network on management control mode is mainly reflected in the dimension of network centrality.The higher a subsidiary company's network centrality is,the more likely parent company tends to adopt a decentralized management control mode.The connection strength and scale of subsidiary company's network have no significant impact on the management control mode.Corporate culture has a positive impact on management control mode,the more perfect a subsidiary company's culture is,the more likely parent company is to adopt a decentralized management control mode.Second,knowledge transfer cost and agency cost jointly restrict the selection of management control mode between parent company and subsidiary company.The higher the knowledge transfer cost is,the more likely the parent company tends to adopt a decentralized management control mode.The higher the agency cost is,the more likely the parent company tends to adopt a centralized management control mode.The selection of management control mode is a trade-off between knowledge transfer cost and agency cost.From the comparison of knowledge transfer cost and agency cost,agency cost has greater impact on management control mode than knowledge transfer cost,and there is no moderating effect between them.Third,knowledge transfer cost and agency cost play an intermediary role in the selection of management control mode between parent company and subsidiary company.If a subsidiary company has a large amount of resources,on the one hand,it will increase the knowledge transfer cost,driving the parent company to adopt a decentralized management control mode,on the other hand,it will increase the agency cost,driving the parent company to adopt a centralized management control mode.If a subsidiary company has good management capability,it will increase the knowledge transfer cost while decrease the agency cost,which together drive the parent company to adopt a decentralized management control mode.The influence of subsidiary company's network on the selection of management control mode has different performances in different dimensions.Among them,the influence of a subsidiary company's network centrality and network connection strength on the selection of management control mode is through the intermediary path of knowledge transfer cost.The higher a subsidiary company's network centrality and network connection strength is,the higher the knowledge transfer cost is,and the more likely the parent company adopt a centralized management control mode.The influence of subsidiary company's network scale on the selection of management control mode is mainly through the intermediary path of agency cost.The larger a subsidiary company's network scale is,the higher the agency cost is,and the more likely the parent company tends to adopt a centralized management control mode.The influence of subsidiary company's culture on the selection of management control mode is through the intermediary path of agency cost.The more perfect a subsidiary company's culture is,the lower the agency cost is,and the more likely the parent company tends to adopt a decentralized management control mode.The possible innovations of this paper are embodied in the following three aspects:First,in the research on the selection of management control mode,the selection mechanism study is rare relatively.Referring to the theory of knowledge transfer cost and agency cost,this paper puts forward an analytical framework for the selection mechanism of management control mode between parent company and subsidiary company,namely "control environment-knowledge transfer cost&agency cost-management control mode".Taking the environmental characteristics of subsidiary company as research object,this paper discusses the intermediary effects between different environmental characteristics and management control mode in the framework,tests the hypotheses based on questionnaire data,helps to open the "black box" of the selection mechanism of management control mode,expands the research on the selection mechanism of management control modeSecond,in the study of knowledge transfer cost and agency cost,the former pays more attention to the production attributes of enterprises,the latter pays more attention to the contractual attributes of enterprises.Some papers study knowledge transfer cost and agency cost in isolation,others just take them as discussion tools of power allocation.This paper puts knowledge transfer cost,agency cost and management control mode into the research on the internal environment of enterprises,discusses how environmental factors such as resources,capabilities,network and culture affect knowledge transfer cost and agency cost,and then affect the management control mode of enterprises.This makes them more like a system,expands the research on the influencing factors of knowledge transfer cost and agency cost in enterprises,and provides ideas for enterprise managers to control them.