Assessing Subsidiary Performance in a Multinational Context - A single case study investigating practical procedures for performance measurement and underlying factors for performance creation.

Abstract

The path for successful performance is uncertain for any corporation, where there is no concise definition of performance and the objective of the organisation. The uncertainties and challenges related to the management of Multinational Corporations (MNCs) complicates the performance assessment of subsidiaries. Simultaneously, 70 percent of firms possess insufficient understanding of key performance indicators (KPIs) and performance measurement systems (PMSs). To address the challenges related to performance assessment, this study breaks out performance by investigating how MNCs use PMSs to assess their subsidiaries globally. The thesis addresses different factors that could influence performance for MNCs, together with aspects that are important to consider when formulating an PMS. A single case study approach was used to get valuable insight into how a single MNC has constructed their PMS and how the decision-makers use their PMS to assess the subsidiaries. Interviews conducted with directors on multiple levels in the Case Company were compared to financial statements, to investigate how the PMS is applicable in one Asian region. Findings in this thesis suggest that it is important to consider what measurements that are included into the PMS, since it could affect the ability of subsidiaries to take initiative and improve the position in MNCs internal network constellation. Furthermore, it also suggests that PMS can influence the ability to develop suitable capabilities to improve future performance. The thesis finds that there is a path in reality that is not coherent with the theoretical approach to generate performance. The analysis shows that the strategy by firms is set by the objective and that the capabilities are developed to align the given strategy. Lastly, the thesis finds that there is no clear path on measurement to assess the whole organisation, but rather a focus on the result rather than the path to performance.