Performance Evaluation Systems of U.K. Multinationals and Host Country Environmental Influences

Marques, Miguel J. P. Athayde (1986) Performance Evaluation Systems of U.K. Multinationals and Host Country Environmental Influences. PhD thesis, University of Glasgow.

Abstract

This study examines the foreign subsidiary performance evaluation and control systems in operation in multinational corporations (MNCs), with a view to determining the extent and ways in which the influences of host country environments are taken into account in the evaluation of operations and managers. Additionally, the study attempts to determine the profile of the multinationals which employ systems that are sensitive to the environment. Environmental recognition in the performance assessment of foreign operations is considered, in particular, to be a vital element of the evaluation and control process in MNCs. This is so due to a number of reasons which have to do first with the application of certain conditions necessary for the accomplishment of an equitable and effective assessment, and second with the internal organization of multinationals, their strategy, and the nature of their activities which may render them particularly vulnerable to host country environmental influences. From the review of the literature, a predominantly deductive mode was chosen, and a set of hypotheses was generated. Data for the research were collected with the help of a questionnaire mailed to the 210 British-based MNCs that form part of the 500 largest industrial companies in the United Kingdom. The overall response rate to the survey amounted to 82 percent. In total, 101 corporations participated in the study which corresponds to a success rate of 48 percent. Further to the questionnaire, in-depth interviews with company senior executives were conducted. The study involved a detailed examination of the formal reporting channels operated between subsidiaries and headquarters, and of the methods and criteria employed in the assessment of foreign operations. A major finding of the research is that in the majority of companies the formal assessment criteria used for foreign subsidiaries and their managers are at least moderately capable of taking host country environmental influences into account. A comparison of this finding with the scarce evidence available from American studies, suggests that the performance evaluation systems used in British MNCs tend to be more sensitive to the environment than those in operation in U. S. multinationals. Despite this intrinsic capability of the systems used, headquarters executives generally believed that formal evaluation criteria should reflect environmental influences to an even greater extent than they actually do. Considering that headquarters executives normally viewed their systems as extensively reflecting the environment, it appears that their requirements in this respect are extremely high. This may be interpreted as an indication of the importance of the environmental issue for those who in practice are involved in the evaluation and control of foreign operations. Multinationals that are largely involved in operating overseas, and whose activities can be seriously affected by changes in host country conditions were found to use methods of performance assessment that take more extensive account of the local environmental situation. In effect, firms with a higher commitment to foreign operations, higher internationalization levels, and a higher exposure to host country and government influences employ evaluation systems that tend to be more sensitive to the environment. Also, companies which have an environmental scanning activity institutionalized at headquarters, tend to employ evaluation systems that are more environmentally sensitive. Besides analysing the formal criteria used in the assessment of foreign operations, the study also examines the role of informal information in the performance evaluation process. Generally, the amount of information retrieved outside the formal communication network and used in performance assessment was found to be very substantial. Contrary to expectations based on theory, the study appears to indicate that information is collected informally mainly to complement the formal evaluation systems and to enhance their capabilities and strengths, rather than to serve as a substitute for them.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Keywords: Management
• Date of Award: 1986
• Depositing User: Enlighten Team
• Unique ID: glathesis:1986-77388
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 14 Jan 2020 11:53
• Last Modified: 14 Jan 2020 11:53
• URI: https://theses.gla.ac.uk/id/eprint/77388