| The Enterprise Group is an organizational system arrangements to overcome the failures of market and organization as the enterprise developed to a certain extent. The formation of enterprise group in China was promoted since1987, along with the enterprise reform and corporate organizational restructuring. After more than20years of development, the leading role of enterprise group in China’s national economy is becoming more and more significant. Compared with international outstanding enterprises, however, large enterprise groups in China are still many inadequacies to some extent in terms of control mechanisms, the ability to innovate, its own brand and international operation, which restricted the sustainable development of enterprises. In addition, the international financial crisis and the sovereign debt crisis offered a favorable opportunity for Chinese enterprises to "go out to overseas. It is an urgent problem of our international operations how to coordinate the relationship between the overseas subsidiaries with the parent company and other subsidiaries to ensure overseas subsidiaries truly integrated into the management system of the Group Company. Therefore, in the post-crisis era, the research of how enterprise groups, based on adjusting business strategy in response to the complex domestic and international environment, coordinate the relationship between their internal member companies of the group to enhance the ability of companies to guide Chinese enterprises to effectively grow and play a more important role in the development of the global economy based on how the has an important theoretical and practical significance.This study used a combinational method of literature research and field research to solve this problem, by The impact of the environment and corporate strategy on the parental control and corporate performance was explored based on the contingency theory on the basis of a summary and extraction of the results of previous studies. The mechanism of contingency factors impact parental control and corporate performance was tested by a survey data.As reviewing the existing research results, the literatures was sorted out to three perspectives:the perspective of the parent’s unified management, the perspective of subsidiary’s own development and the perspective of relationship network of parent-subsidiary. The perspective of the parent’s unified management was on the basis of traditional bureaucracy. Subsidiary was seen as a vassal of the parent company in this perspective, whose main task is to help the parent company to realize their overall strategy. The Group’s internal network could save transaction costs, thereby ensuring the survival of the company and improving operational efficiency. In the perspective of subsidiary’s own development, the subsidiary is not just a subsidiary of the parent company, and they all play different roles to undertake certain strategic task. The parent company may establish different management and control mechanisms according to the different roles of each subsidiary to guide its global strategy configuration. In the perspective of relationship network of parent-subsidiary, the parent-subsidiary structure is a network of relationship. The subsidiary is not only associated with the Group’s internal network, but also outside the enterprise network. The study focused on external network within the Group as well as the flow of knowledge-based control. It is different of the three research perspective in assumptions, research focus and the basic theory. What’s more, different views Exist in the source of business advantage, the relationship between parent and subsidiary companies, control mechanisms. This article summarized and compared those differences.On the basis of the literature review, combined with the actual situation of China enterprise group, this article was to study the problem in the perspective of the parent’s unified management. The conceptual framework was built based on the contingency theory to explore the moderate effect of external environment and corporate strategy on the relationship between parent-subsidiary control and corporate performance. According to external environment, its impact on the management and control was explored from three dimensions:dynamic, munificence and complex. Corporate strategy, includes corporate-level strategy and business level strategy. The impact of diversification was tested in terms of corporate-level strategy. Business strategy includes cost leadership and differentiation according to Porter,. Parental control was investigated through two dimensions:the degree of control and control mechanism. The later can be divided into formal control and informal control.This study proposed14hypotheses based on the conceptual framework, all of which were assuming moderating effect. Among them, environmental dynamic, munificence and complexity, degree of diversification of the parent company, degree of diversification of the subsidiary and differentiated strategy would have positive influence to the relationship between the degree of control and corporate performance, and the relationship between formal control and corporate performance. Nevertheless they have negative influence to the relationship between informal control and corporate performance. Cost leadership strategy would have negative influence to the relationship between the degree of control and corporate performance and the relationship between the formal control and firm performance. And it would have positive influence to the relationship between informal control t and enterprise performance.To verify the theoretical assumptions, the study sent out297questionnaires to managers working in subsidiary level, and110copies of questionnaires were recovered to get a recovery rate of37%. The questionnaires that missed important information and the randomness of strong invalid questionnaires were excluded. The final87valid questionnaires were remained to process. The effective rate is29.3%. Hierarchical regression model was used to test hypotheses. Standardized processing of the independent variables and the moderator variable was made to calculate interaction before regression processing. During data processing, the control variables were first placed in, and then environment variable, corporate strategic variables and parental control variables, the interaction terms were placed in the last. From the test results, six assumptions can be accepted. Because the moderating variables which affected formal control and informal control were more than two in the results, two-dimensional adjustment was made. But the results were not significant. The article also discussed the results of the study. The article took summary and outlook on the study. Compared with the existing research results, the theoretical contribution of this study is mainly reflected in three aspects. First, this study constructed a theoretical model of the parental control based on contingency theory, starting from the transition unique enterprise groups in China.Western Enterprises Group management and control theory was built in a relatively free market economic, while our transition Enterprises Group have many differences with Western enterprises in many ways. What’s more, previously literatures in domestic on the parental control mainly using principal-agent theory or transaction cost theory, but few empirical test of the theoretical issues raised. Even fewer studies tested the impact of external environment on control system. The system model constructed in this study to consider the different external environment and corporate strategy scenarios, and how to control subsidiary companies was more conducive to enhance corporate performance, rich theoretical study of the existing parental control to some extent. It also has certain reference value for the group companies’management framework design.Second, this study took a empirical test of the moderating effect of the external environment on parental control through the survey data, and examined the Contingency impact of the special nature of the economic environment in China on parental control. From three dimensions of the external environment:dynamic, and complex, it tested in a different state of the environment how to design a degree parental control of the subsidiary for the parent company. The study found that when the munificence of environment was low, reducing the use of informal control would be conducive to improve business performance. When the environmental complexity was low, increased formal control would reduce performance.Finally, the integration effects of parental control and corporate strategy at two levels were tested. Empirical test results showed that when diversification of the parent at a low degree, the more parent company took formal control on subsidiaries, the more beneficial to enhance corporate performance. From a business strategy perspective. When the subsidiary took a cost leadership strategy, reducing informal control would be conducive to enhance corporate performance. When the subsidiary took differentiation strategy, the increase of informal control was conducive to enhancing enterprise performance.In this study, there are some limitations in the scope and sample data, which might affect the external validity of the study results. In the future studies could test more organizational variables, using multiple data or longitudinal data,and exploring the consequent of the parental control so as to advance the research of this field moew in-depth. |
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