The Building of Country Manager's Competence and Its Use to Orchestra Subsidiary's Resources: Empirical Study of Indonesian Subsidiaries in Nigeria

https://doi.org/10.22146/gamaijb.29191

So Yohanes Jimmy(1*), Firmanzah Firmanzah(2), Tengku Ezni Balqiah(3), Albert Widjaja(4)

(1) University of Indonesia
(2) University of Indonesia
(3) University of Indonesia
(4) University of Indonesia
(*) Corresponding Author

Abstract


This study employs resource orchestration model to investigate the influence of country manager’s competence on subsidiary performance in host country. Structural equation model with multisteps approach is operated using Lisrel to analyze 41 data from Indonesian business unit operating in Nigeria. This study found that country managers uses subsidiary absorptive capacity, which is formed by the combination of headquarter and local partner resources, as the dominant source of learning to develop their competence overtime. This competence does not directly influence subsidiary performance, but it is notably used to accumulate the critical assets for their subordinate business units. These assets then become valuable inputs for business units to develop or modify their operational capabilities, which directly influence the performance. One contribution of this study is providing more detail explanation of how headquarter resources invested abroad are transformed into subsidiary performance.


Keywords


absorptive capacity, capability development, country manager competence, headquarter resource, resource orchestration

Full Text:

PDF


References

Adegbesan, J. A. 2009. On the origins of competitive advantage: Strategic factor markets and heterogeneous resource complementarity. Academy of Management Review 34: 463-475.
Ahearne, M., S.K. Lam, and F. Kraus. 2014. Performance impact of middle managers' adaptive strategy implementation: The role of social capital. Strategic Management Journal 35 (1): 68-87.
Ahuja, G., and R. Katila. 2004. Where do resources come from? The role of idiosyncratic situations. Strategic Management Journal 25: 887-907.
Amit, R., and P. J. H. Schoemaker. 1993. Strategic assets and organizational rent. Strategic Management Journal 14: 33-46.
Anderson, J.C.; D.W. Gerbing. 1988. Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin 103 (3): 411-423.
Aykut, A. D., Ratha, D. 2004. South-South FDI flows: How big are they? Transnational Corporations 13 (1): 151-176
Barlett, C. A., and S. Ghoshal. 1997. The myth of the generic manager: New personal competencies for new management roles. California Management Review 40 (1): 92-116.
Bellner, B.; and D. MacLean. 2015. Dynamic managerial capabilities and competitive advantage. Strategic Management Quarterly 3 (3): 1-23
Birkinshaw, J. 1997. Entrepreneruship in multinational coporations: The characteristic of subsidiary initiatives. Strategic Management Journal 18 (3): 207-229
Birkinshaw, J., and N. Hood. 1998. Multinational subsidiary evolution: Capability and charter change in foreign-owned subsidiary companies. Acedemy of Management Review 23 (4): 773-795.
Bridoux, F., K.G. Smith, and C. M. Grimm. 2011. The management of resources: Temporal effects of different types of actions on performance. Journal of Management 39 (4): 928-957.
Chadwick, C., J. F. Super, and K. Kwon. 2015. Resource orchestration in practice: CEO emphasis on SHRM, commitment-based HR systems, and firm performance. Strategic Management Journal 36 (3): 360-376.
Chang, Y., Y. Gong, and M. Peng. 2012. Expatriate knowledge transfer, subsidiary absorptive capacity, and subsidiary performance. Academy of Management Journal 55 (4): 927-948.
Chirico, F., D.G. Sirmon, S. Sciascia, and P. Mazzola. 2013. Resource orchestration in family firms: Investigating how entrepreneurial orientation, generational involvement, and participative strategy affect performance. Strategic Entrepreneurship Journal 5: 307-326.
Costa, L.A., K. Cool, K., and I. Dierickx. 2013. The competitive implication of the deployment of unique resources. Strategic Management Journal 34 (4): 445-463.
Crossan, M., H. Lane, and R. White. 1999. An organizational learning framework: From intuition to institution. Academy of Management Review 24 (3): 522-538.
Cuervo-Cazurra, A.; M. Genc. 2008. Transforming disadvantages into advantages: Developing-country MNEs in the least developed countries. Journal of International Business Studies, 39(6): 957-79
Cui, A.S., R. J. Calantone, D.A. Griffith. 2011. Strategic change and termination of interfrim partnership. Strategic Management Journal 32: 402-423.
Dacin, M.T., C. Oliver, C., and J. P. Roy. 2007. The legitimacy of strategic alliances: An institutional perspective. Strategic Management Journal 28 (2): 169-187.
Danneels, E. 2008. Organizational antecedents of second-order competences. Strategic Management Journal 29 (5): 519-543.
Desarbo, W. S., C. A. Benedetto, M. Song, and I. Sinha. 2005. Revisiting the miles and snow strategic framework: Uncovering interrelationships between strategic types, capabilities, environmental uncertainty, and firm performance. Strategic Management Journal 26: 47-74.
Dyer, J. H., and H. Singh. 1998. The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review 23 (4): 660-679.
Ernest and Young. 2014. Africa by Numbers: A Focus on Nigeria. Special Report Issued for World Economic Forum on Africa 2014.
Fernandez, E., J. M. Montez, and C. J. Vazquez. 2000. Typology and strategic analysis of intangible resources: A esource-based approach. Technovation 20: 81-92.
Galbreath, J. 2005. Which resources matter the most to firm success? An exploratory study of resource-based theory. Technovation 25: 979 - 987.
Grady, S. O., and H. W. Lane. 1996. The psychic distance paradox. Journal of International Business Studies 21: 309-333.
Griffith, D. A., and J. J. Hoppner. 2013. Global marketing managers. International Marketing Review 30 (1): 21-41
Gruber, M., F. Heinemann, M. Brettel, and S. Hungeling. 2010. Configurations of resources and capabilities and their performance: An exploratory study on technology venture. Strategic Management Journal 31 (12): 1337-1356.
Gupta, A. K., P. E. Tesluk, and M. S. Taylor. 2007. Innovation at and across multi levels of analysis. Organization Science 18 (6): 885-897.
Hair, J. F.; W. C. Black, B. J. Babin, R. E. Anderson, and R. I. Tatham. 2006. Multivariate Data Analysis (Eds). Upper Saddle River, NJ: Prentice Hall
Haller, C., S. Amabile, R. Meissonier, and S. Boudrandi. 2013. Business intelligence and absorptive capacity of information by wineries in the Provence wine industry. International Business Research 6 (2): 126-136.
Helfat, C. E., and M. A. Peteraf. 2003. The dynamic resource-based view: Capability lifecycles. Strategic Management Journal 24 (Special Issue): 997-1010.
Helfat, C. E., and M. A. Peteraf. 2014. Managerial cognition capabilities and microfoundation of dynamic capabilities. Strategic Management Journal 36 (6): 831-850.
Helfat, C. E., and J. A. Martin. 2015. Dynamic managerial capabilities: Review and assessment of managerial impact on strategic Change. Journal of Management 41 (5): 1281-1312
Henderson, R., and I. Cockburn. 1998. Absorptive capacity, coathoring behavior, and the organization of research in drug discovery. Journal of Industrial Economics 46 (2): 157-182.
Hewett, K., M. S. Roth, and K. Roth. 2003. Conditions influencing headquarters and foreign subsidiary role in marketing activities and their effects on performance. Journal of International Business Studies 34 (6): 567-585
Hodgkinson, G. P., and M. P. Healey. 2011. Psychological foundation of dynamic capabilities: reflexion and reflection in strategic management. Strategic Management Journal 32 (13): 1500-1516.
Holcomb, T. R., R. M. Homes Jr., and B. L. Conelly. 2009. Making the most of what you have: Managerial ability as a source of resource value creation. Strategic Management Journal 30 (5): 457-485.
Holm,U., C. Holstrom, and D. Sharma. 2005. Competence development through business relationship or competitive environment? Management International Review 45 (2): 197-218.
Iarosi, G., P. Mousley, and I. Radwan. 2009. An Assessment of The Investment Climate in Nigeria. Washington, DC: The World Bank
Inkpen, A. C., and P. W. Beamish. 1997. Knowledge, bargaining power, and the instability of international joint ventures. Academy of Management Review 22: 177-202.
Jansen, J. J. P., F.A.J. Van den Bosch, and H. W. Volberda. 2005. Managing potential and realized absorptive capacity: how do organizational antecedents matter? The Academy of Management Journal 48 (6): 999-1015.
Johanson, J., and J. E. Vahlne. 1977. The internationalization process of the firm: A model of knowledge development and increasing foreign market commitment. Journal of International Business Studies 8 (1): 23-32.
Johanson, J., and J. E. Vahlne. 2006. Commitment and opportunity development in the internationalization process: A note on the Uppsala internationalization process model. Management International Review 46 (2): 165-178.
Johanson, J., and J. E. Vahlne. 2009. The Uppsala internationalization process model revisited: From liability of foreigness to liability of outsidership. Journal of International Business Studies 40 (9): 1411-1431.
Ju, M., H. G. Fung, and H. Mano. 2013. Firm capabilities and performance: Institutional perspective on foreign and local firms in China. The Chinese Economy 46 (5): 86-104.
Kelliher, F., and L. Reinl. 2009. A resource-based view of micro-firm management practice. Journal of Small Business and Enterprise Development 16 (3): 521-532.
Ketchen, D. J., K. D. Wowak, and C. W. Craighead. 2014. Resource gaps and resource orchestration shortfalls in supply chain management: The case of product recall. Journal of Supply Chain Management 50 (3): 6-15.
Kor, Y. Y., and A. Mesko. 2013. Dynamic managerial capabilities: Configuration and orchestration of top executive's capabilities and the firm's dominant logic. Strategic Management Journal 34: 233-244.
Lee, S., and D. J. Teece. 2013. The functions of middle and top management in the dynamic capabilities framework. Kindai Management Review 1: 28-40.
Lenox, M., and A. King. 2004. Prospects for developing absorptive capacity through internal information provision. Strategic Management Journal 25: 331-345.
Lu, Y., L. Zhou, G. Bruton, and W. Li. 2010. Capabilities as a mediator linking resources and the international performance of entrepreneurial firms in an emerging economy. Journal of International Business Studies 41: 419-436.
Luo, Y. 2003. Market-seeking MNE in an emerging market: How parent-subsidiary links shapes overseas success. Journal of International Business Studies 34 (3): 290-309.
Mahnke, V., T. Pedersen, and M. Venzin. 2005. The impact of knowledge management on MNC subsidiary performance: The role of absorptive capacity. Management International Review 45 (2): 101-119.
Maitland, E., and A. Sammartino. 2015. Decision making and uncertainty: The role of heuristics and experience in assessing a political hazardous environment. Strategic Management Journal 36 (10): 1554-1578.
Makino, S., and A. Delios. 1996. Local knowledge transfer and performance: Implications for alliance formation in Asia. Journal of International Business Studies 27: 905-927.
Maritan. C. A., and M. A. Peteraf. 2011. Building a bridge between resource acquisition and resource accumulation. Journal of Management 37(5): 1374-1389.
Melaia, S., R. Abratt, and G. Bick. 2008. Competencies of marketing managers in South Africa. Journal of Marketing Theory and Practice 16 (3): 233-246.
Minbaeva, D., T. Pedersen, I. Bjorkman, C. F. Frey, and H. J. Park. 2003. MNC knowledge transfer, subsidiary absorptive capacity, and HRM. Journal of International Business Studies 34 (6): 586-599.
Mindrilla, D. 2010. Maximum likelihood (ML) and diagonally weighted least square (DWLS) estimation procedures: A comparison of estimation bias with ordinal and multivariate non-normal data. International Journal of Digital Society 1 (1): 60-66.
Moran, T. 1985. Multinational Corporations: The Political Economy of Foreign Direct Investment. Lexington, MA: Lexington Books.
Morris, S. S., and S. A. Snell. 2011. Intellectual capital configurations and organizational capability: An empirical examination of human resource subunits in the multinational enterprise. Journal of International Business Studies 42 (6): 805-827.
Mu, S., D. R. Gnyawali, and D. Hatfield. 2007. Foreign subsidiaries' learning from local environment: An empirical test. Management International Review 47 (1): 79-102.
Noblet, J. P., E. Simon, and R. Parent. 2011. Absorptive capacity: A proposed operationalization. Knowledge Management Research and Practice 9: 367-377.
O'Brien, D., P.S. Scot, and P. Gibbons. 2012. Developing strategy from the middle: Subsidiary strategy and the role of the subsidiary general manager. Irish Journal of Management 109-128.
Parera, L. B., and A. M. Fernandez-Vallejo. 2013. Changes in the role of middle manager: A historical point of view. International Journal of Information and Education Technology 3 (3): 362-365.
Patel, P., M. Kohtamaki, V. Parida, and J. Wincent. 2015. Entrepreneurial orientation-as-experimentation and firm performance: The enabling role of absorptive capacity. Strategic Management Journal 36 (11): 1739-1749.
Pedersen, T., Petersen, B. 2004. Learning about foreign markets: Are entrant firms exposed to a "shock effect"? Journal of International Marketing 12 (1): 103-123.
Pennings, J. M., H. G. Barkema, and S. W. Douma. 1994. Organizational learning and diversification. Academy of Management Journal 37: 608-640.
Powpaka, S. 1998. Factors affecting the adoption of market orientation: The case of Thailand. Journal of International Marketing 6 (1): 33-55.
Randoy, T., and T. T. Dibrell. 2002. How and why Norwegian MNCs commit resources abroad: Beyond choice of entry mode. Management International Review 42: 119-140.
Rhemtulla, M.; P. E. B. Liard, and V. Savalei. 2012. When can categorical variables be treated as continuous? A comparison of robust continuous and categorical SEM estimation methods under suboptimal conditions. Psychological Methods 17 (3): 354-373.
Rugman, A. M., and A. Verbeke. 2001. Subsidiary-specific advantages in multinational enterprises. Strategic Management Journal 22: 237-250
Santangelo, G. D., and K. E. Meyer. 2011. Extending the internationalization process model: Increases and decreases of the MNE commitment in emerging economies. Journal of International Business Studies 42: 894-909.
Schmid, S., and A. Schurig. 2003. The development of critical capabilities in foreign subsidiaries: Disentangling the role of the subsidiary's business network. International Business Review 12: 755-782.
Sirmon, D.G., M. A. Hitt, and R. D. Ireland. 2007. Managing firm resources in dynamic environments to create value: Looking inside the black box. Academy of Management Review 32 (1): 273-292.
Sirmon, D. G., M. A. Hitt, R. D. Ireland, and B. A. Gilbert. 2011. Resource orchestration to create competitive advantage: Breadth, depth, life cycle effects. Journal of Management 37 (5): 1390-1412.
Trapczynski, P. 2013. Does foreign direct investment theory explain subsidiary performance? A critical literature review. Poznan University of Economic Review 13 (2): 47-64.
Vahlne, J., and J. Johanson. 2017. From internationalization to evolution: The Uppsala model at 40 years. Journal of International Business Studies 48 (9): 1087-1102.
Vera, D., and M. Crossan. 2004. Strategic leadership and organitional learning. The Academy of Management Review 29 (2): 222-240.
Volberda, H. W., N. J. Foss, and M. A. Lyles. 2010. Absorbing the concept of absorptive capacity: How to realize its potential in the organization field. Organization Science 21 (4): 931-951.
Vora, D., T. Kostova, and K. Roth. 2007. Roles of Subsidiary managers in multinational corporations: The effect of dual organization identification. Management International Review 47 (4): 595-620
Wijanto, S. H. 2008. Structural Equation Modeling: Konsep dan Tutorial. Jakarta: Graha Ilmu.
Wooldridge, B.; T. Schmid, and S. W. Floyd. 2008. The middle management perspective on strategy process: Contributions, synthesis, and future research. Journal of Management 34 (6): 1190 - 1221
Yalcinkaya, G., R. J. Calantone, and A. Griffith. 2007. An examiation of exploration and exploitation capabilities: Implications for product innovation and market performance. Journal of International Marketing 15 (4): 63-93.
Yuan, F., and R. W. Woodman. 2010. Innovative behavior in the workplace: The role of performance and image outcome expectation. The Academy of Management Journal 53 (2): 323-342.
Zahra, S. A., and G. George. 2002. Absorptive capacity: A review, reconceptualization, and extention. The Academy of Management Journal 27 (2): 185-203.
Zoghi, C., R. D. Robert, and P. B. Meyer. 2010. Workplace organization and innovation. The Canadian Journal of Economics 43 (2): 622-639.
Zolo, M., and S. G. Winter. 2002. Deliberate learning and the evolution of dynamic capabilities. Organization Science 13 (3): 339-351.



DOI: https://doi.org/10.22146/gamaijb.29191

Article Metrics

Abstract views : 1592 | views : 1028

Refbacks

  • There are currently no refbacks.




Copyright (c) 2019 Gadjah Mada International Journal of Business

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.