An Examination of the Core Dimensions
- New Horizons in International Business series
4. Management control INTRODUCTION A key challenge of corporate governance is the manner in which corporate owners can exercise effective control over the direction of their companies. Control raises questions concerning the rights of smaller versus dominant stockholders and how managers can be held accountable as the agents of corporate owners. These questions have been addressed mainly to unitary enterprises, but comparable issues arise in international joint ventures, where the partners in IJVs are also in the position of co-owners. IJV governance defines how an IJV is managed, how it is organized and regulated by agreements and processes, and how the partners control and influence its evolution and performance over time (Doz and Hamel, 1998: 120). Management control is the process by which a parent organization influences its subunits (the IJVs) to behave in ways that lead to the attainment of organization objectives and the organization’s ability to influence IJV activities and how they are performed (Lin et al., 1997). Control is recognized as a critical issue for the successful management and performance of IJVs (Geringer and Hebert, 1989). Problems may arise both in relations between the partners, who may be concerned with the extent to which each of them can influence the IJV so that it meets their objectives, and between the partners and their agents – the managers of the IJV. Parents must ensure that IJV managers are held accountable for performance to the owners. While this situation is not unique to IJVs, it can be complicated by the...
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