Research On Performance Evaluation Of Parent-subsidiary Corporations Based On Cooperative-network

In recent years, the enterprise groups have been transforming from traditional bureaucracy to networking, with the wide use of IT and the rapid development of economy. But the complexity of the internal network results in information asymmetries, rigid organizational relationship within the group, which becomes more serious. So there are not enough organic links between parent and subsidiary companies, and specialized division of labor or coordination is also poor, causing a number of enterprise groups being less competitive. And it is difficult to achieve synergistic effect. Thus, in the networked environment, how to manage and control the subsidiary companies effectively has become a new governance challenge for the parent company. While the parent-subsidiary corporation performance evaluation system, which is the important source of information and decision-making basis, plays an important role in enhancing the level of management and control, so the research on the performance evaluation of parent-subsidiary corporations based on cooperative-network has important theoretical significance and practical significance.However, the current researches on the performance evaluation focus on a single enterprise mainly. Though some of them are about the enterprise group performance evaluation, there is a question that most of them result either for the analysis of the Group's overall performance, or just simply be equated with a subsidiary of a single enterprise, ignoring the specific properties of the Group subsidiaries performance, regardless of the evaluation indicators, or evaluation methods, evaluation criteria, etc. Especially with the accelerating process of networking, the performance structure of subsidiary is no longer simply confined to the financial performance and non-financial performance conventionally, which is the product of the complex network relationships. So only evaluating the financial and non-financial performance has been difficult to accurately measure the value of a subsidiary of the contribution and future development trend, and also difficult to meet the parent company decision-making needs as a predictive tool. This not only limits the further enrichment and development of the theory of enterprise group management control, but also makes the parent-subsidiary corporation performance evaluation system being difficult in practice to be effective in application and inspection, which hinders the system to play its due role.For this reason, this study chooses the subject on parent-subsidiary corporation performance evaluation based on cooperative-network. Through the analysis of the current parent-subsidiary corporation performance evaluation's present situation and problem, combining with the continuous development of the theory and methods of performance evaluation at home and abroad, we try to seek an effective proposal for parent-subsidiary corporation performance evaluation in new network environment, to help the system play an more and more important role in enhancing the management capacity and core competitiveness of enterprise groups.We can summarize the main contents of this study to the following five parts:First, we analyze the network properties of enterprise groups systematically, and summarize its main features, to provide a reasonable organization basis for the performance evaluation system. As the technology improving and competition intensifying, enterprise grouping and group networking has become a modern trend of the organizational development. Network organization has been widely used because of its unique competitive advantages, so enterprise groups have also started to transform from the traditional hierarchical system to the network changes, which is even more fit for the enterprise group's own organizational characteristics, such as the strong natural heterogeneity, universal trust and cooperation mechanism, a large number of insider trading, etc., which further accelerates the enterprise group networking process from the other side, and presents new and different organizational characteristics, such as the importance of the relationship. This change puts forward higher requirements to enterprise group management control systems. While the parent-subsidiary corporation performance evaluation system as an important component of it and decision-making information sources, it is inevitable for the performance evaluation system to innovate to adapt to this new organizational environment.Second, based on cooperative-network, we redefine and build the performance structure of the subsidiary from the performance nature. This study uses the "structure-relationship" dimension of social network analysis to divide the subsidiary performance into task performance and contextual performance, based on their motivation and the nature of the different characteristics. On one hand, the task performance covers the structure of the traditional financial performance and non-financial performance, emphasizing on the performance nature of individuality and result; on the other hand, the contextual performance focuses on the impact of complex group internal relationship, emphasizing on the performance nature of relativity and ethologisch They affect each other and constitute the integrated performance of a subsidiary. In addition, we analyze the theoretical basis and practical results of the contextual performance:the inter-organizational relationships result in the enterprise group's synergistic effect, which is the key motive to the contextual performance. And its manifestations are varied, including kinds of internal trades and other cooperative behaviors that are difficult to measure. With this analysis, we want to strengthen the understanding of this new type of performance, in order to lay the foundation for building the evaluation system.Third, in this part, we sum up the main influence factors of the parent-subsidiary corporation performance evaluation system, and divide them into three parts:the part of external layer of enterprise groups, business groups and subsidiary layer. Then, basing on analyzing these elements mechanism, we build a new parent-subsidiary corporation performance evaluation system according to the certain principles and procedures, combining with the group network organization characteristics and its inherent requirements to the evaluation system. The system includes the evaluation objectives, evaluation indicators and so on, and we focus on the analysis of the evaluation objectives and evaluation criteria:we add the "innovation" and "cooperation" objective to the BSC target system and divide it into universality and particularity of targets. Besides, we not only make clear the question that how to choose the evaluation criteria, such as consistency, workability, and incentives, etc., but also compare historical standards, industry standards and the budget standards that are popular at present. We get the conclusion the budget standard is our first choice. Forth, according to the classification of the performance structure of the subsidiary, following the strict theoretical basis and using the scientific principles and process, we build the parent-subsidiary corporation performance evaluation index system. The study divides the subsidiary performance into task performance evaluation indicators (divided into financial performance and non-financial performance evaluation indicators) and contextual performance evaluation indicators. Among them, the financial performance evaluation indicators include debt paying ability, operation capacity, profitability and development capacity; and the non-financial performance evaluation index mainly reflected subsidiaries markets and customers, learning and growth, organization and processes, and knowledge of and innovation in four aspects. As the contextual performance is the direct reflection of the relationship, we should set the indicators in accordance with the relationship type. It is relatively simple and straightforward to evaluate the performance of transactional relationships based on the transaction price fair or not to decide how to deal with; while the non-transactional relationship performance evaluation is difficult. We often evaluate it from cooperation scope, cooperation level and cooperation stability using the subjective evaluation method.Fifth, based on the first-hand data we getting through field interviews and a questionnaire survey, on one hand, we make the empirical analysis between contingency factors and performance indicators (including task performance evaluation indicators and contextual performance evaluation indicators); on the other hand, we also make the empirical analysis between performance indicators using and its performance. Generally speaking, the using and valuing of task performance indicators is a significant positive correlation with its strategic importance, scale, level of competition, life cycle and internal relations, so is task performance indicators. The significant positive correlation also exists between task performance indicators using (including the financial performance evaluation indicators and the non-financial performance evaluation indicators), contextual performance indicators (including cooperation scope, cooperation level and cooperation stability) and its performance.The innovation points of this research include the following three aspects: First, we reconstruct the subsidiary's performance structure based on cooperative-network, which will help us not only fully understand the performance properties of the enterprise group, but also build more targeted evaluation system. More specifically, according to the characteristics of enterprise group network organization and the nature of the performance concept, we upgrade the subsidiary's performance structure from the traditional "financial-non-financial" category to "task-contextual" category, in order to fully reflect the performance of cooperative networks and build the basis for a new evaluation system and the evaluation index system. Traditional performance evaluation is limited to financial performance and non-financial performance. But in the networking groups, both the subsidiary performance's agent and show are different. Resulting from the relationship importance and complexity, which makes it become the key point for the subsidiary performance and affect it more and more. Therefore, in order to be more accurate and comprehensive assessment of the achievement of a subsidiary performance, but also to serve the parent company controls system needs more effectively, this research divide the subsidiary performance into task performance(covering financial performance and non-financial performance) and contextual performance(including transaction type and non-transaction type).Second, based on the systematic analysis of enterprise group network characteristics and subsidiary performance structure, we build a new parent-subsidiary corporation performance evaluation system and carry out varying degrees of expansion and innovation on the main evaluation elements. For example, we add the "cooperation" objective to the Balanced Scorecard traditional target system. Especially the evaluation index system designing, we not only make the integration of the financial indicators and non-financial indicators, objective indicators and subjective indicators and task indicators and the contextual indicators, etc., but also build the contextual indicators innovatively. More specifically, the financial performance indicators include solvency, operational capacity, profitability and development capacity; the non-financial performance indicators include market and customers, learning and growth, organization and processes and four aspects of knowledge and innovation and so on. We can evaluate the performance of transactional relationships based on the transaction price fair or not to decide how to deal with; while the non-transactional relationship performance evaluation is often evaluated from cooperation scope, cooperation level and cooperation stability using the subjective evaluation method. This enriches the connotation of parent-subsidiary corporation performance largely, so that a more comprehensive evaluation is completed and the result of evaluation is more just and acceptable.Third, based on the theoretical study, we design the interviews and questionnaire survey to obtain first-hand information, with which we can make analysis and empirical testing to the anterior conclusion. Through this combination of theory and practice, we have demonstrated and reinforced the relevant issues. In brief, on one hand, we make the empirical analysis between contingency factors and performance indicator using and valuing; on the other hand, we also make the empirical analysis between performance indicators using and its performance to clarify its effectiveness, in order to provide supporting services for the system follow-up improvement and optimization, and ensure its continued efficient.