A Study On Project Governance In Oversea Investment Of Energy Project From China Enterprises

With the adjustment of energy strategy, the major energy consumers have begun to look overseas for new energy supplies, and the competence for the energy becomes fierce. In this situation, China Enterprises expands the overseas market and establish project companies for construction and operation of energy projects. Because of information asymmetry and environment uncertainty, Chinese parent company couldn’t realize the control to the project company, and this may lead to the failure of the investment. It is very import to explore the governance structure from the perspective of Chinese enterprises. Based on the vertical governance, this paper aims to analyze the pattern of parent management control of and factors which affect the choice of control pattern, thus avoiding the opportunism and promoting the performance of the project.By reviewing the literature, scholars have explored the management control in international manufacture area, analyzing the dimension of management control and the relationship between control and performance. Other scholars also investigated this relationship in international construction joint ventures. But there is still no good answer on “What factors influence the choice of parent management control to the foreign project company”. Through a case study of mega energy project, this paper conceptualized parent management control in two dimensions, formal control and informal control. Formal control included output control and process control, while informal includes social control. Then, we explored a framework to analysis the factors which influence the management control. The factors include parent company related factors, which is equity, resource contribution of parent company, and goal incongruence between parent companies, project related factors, which is project’s importance to the parent company, project complexity, construction stage and project activities, environment related factors, which is environment uncertainty, and cultural differences.This thesis.found that parent company related factors and environment related factors have influence on both formal and informal control, while project relates factors will have an effect on formal control. When the project is very important to the parent company and the complexity is high, Chinese parent company tends to use process control in the previous stage, purchase and bidding stage, the control objects will be investment, schedule, quality which is seemed more important when assess the performance of the project.