Differentiation of subsidiary management in an international service company

Abstract

During the past twenty years, services have taken the place of manufacturing as the most important generator of global gross domestic product. Still, service businesses are far behind manufacturing in the level of internationalization. The trend however, is changing and service companies are crossing national borders all over the world. As providing services differs from manufacturing of goods in many aspects like intangibility, separability, variability and perishability, special knowledge about their management is needed in an international environment.

The present study focuses on the management of existing international subsidiaries of a financial management services company. The research problem of the study is formulated as "How to manage existing country offices of an international service company?" The research problem is divided into three research questions:.

1. What are the special aspects of internationalization for a service company?.

2. How should the headquarters-subsidiary relationships be managed?.

3. What is the current situation of subsidiary management at Accountor Group and how could it be improved?

The literature study examines previous research on service business, internationalization of service business, international subsidiary management and global integration modes. The empirical study was conducted with a questionnaire and reported as a case study of five country organizations of the target company. It describes the current situation of subsidiary management, country manager preferences and best practices from subsidiary management research, implemented for each subsidiary context.

As a result of the study, recommendations to increase normative integration and information-based integration in all of the target subsidiaries were made. In case of centralization and formalization the recommended levels differ for each subsidiary context. As for academic contribution, the existing best practices were in line with the country manager preferences and therefore supported by the results.