企業集團子公司總經理的集團信息系統功能感知及心理所有權對子公司績效的影響機制研究

Abstract

The acceleration of business globalisation, the diversification of business strategies and the significant increase in industry concentration have given birth to many large-scale and powerful enterprise groups. An enterprise group is a corporate legal entity consortium consisting of parent and subsidiary companies as well as other joint-stock companies or constituent companies. Through risk sharing, resource coordination and diversified industrial development, enterprise groups gradually gain competitive advantages. However, many problems associated with internal management and control have emerged as enterprise groups continue to expand, such as excessive centralisation, excessively long management chains, and vicious competition within the group. To take advantage of collectivised operations within the group, such as reducing internal operating costs and improving the group’s operational efficiency, it is essential to design a strong parent–subsidiary governance mechanism. The most common governance mechanism is one in which the parent company (the entrusting party) hires and entrusts managers (agents) to manage the subsidiaries. However, some principle–agent problems may arise in such a mechanism. That is, managers (agents) may tend to be risk averse (e.g., adhering to conventions, ‘not seeking for nothing, but seeking no fault’, and paying more attention to achieving short-term financial outcomes) and opportunistic (e.g., abusing power for personal gain, squandering funds for favouritism, self-serving).

To solve the principal–agent problem between parent and subsidiary companies, previous studies have explored the role of control mechanisms (e.g., parent companies’ one-way control of subsidiaries, the role of the board, and the role of the supervisory board) and incentive mechanisms (equity structure, equity incentives). However, the control mechanisms have shortcomings such as a lack of flexibility and harming the proactivity of subsidiaries. In addition, the board and the supervisory board cannot fundamentally solve the problem of information asymmetry between parent and subsidiary companies. Moreover, incentive mechanisms are not always effective. Previous research has revealed paradoxical results for the impact of equity incentives on the performance of subsidiaries, with positive, negative, and non-significant impacts being reported. Previous studies have paid little attention to the key behavioural subject – the general manager of the subsidiary – while the effectiveness of the control mechanism and incentive mechanism depends largely on what the general manager thinks and does. In the context of the popularisation of Internet technology, the parent company also relies heavily on information systems (IS) to control and incentivise its subsidiaries. An enterprise group’s IS can make business processes more standardised and transparent, solve the problem of information asymmetry between parent and subsidiary companies, and help the parent company to control subsidiaries. The group’s IS can also provide the general managers of subsidiaries with important information about the external market and environment, which is conducive to optimising decision-making and in turn incentivising the managers. Given the shortcomings of control and incentive mechanisms noted in the literature and the advantages of IS, this study explores the effective governance of parent and subsidiary companies from the perspectives of the general manager of a subsidiary’s psychological cognition, motivation and behaviour, combined with the advantages of an enterprise group’s IS.

Specifically, this study combines cognitive evaluation theory with IS-related research to creatively propose a control mechanism and an information value mechanism, namely, the general manager’s perception of the informational and controlling functions of the group’s IS. The relationship between the general manager’s perception of the controlling function of the group’s IS and self-interest orientation, and the relationship between the perception of the informational function of the group’s IS and strategic orientation are explored, and the effects of the two behavioural orientations on subsidiary performance are examined. Second, this research proposes an incentive mechanism centred on the psychological ownership that the general manager of a subsidiary feels toward the subsidiary company he or she works for, and explores the effects of the general manager’s psychological ownership on their self-interest orientation and strategic orientation. Third, this study explores how perceptions of the group’s IS and psychological ownership interact and jointly affect managers’ behavioural orientations and the subsidiary’s performance.

A large enterprise group with 74 subsidiaries was selected as the research object. The final sample included 67 general managers of 67 subsidiaries in the group company. To ensure data rigor, seven general managers were eliminated after personnel changes. A multi-wave, multisource, on-site survey method was used to collect the data. The general managers were asked to report their psychological ownership and perceptions of the group’s IS functions at Time 1. Six months later, at Time 2, archival data indirectly reflecting the general managers’ behavioural orientation and objective performance data of the subsidiary were collected. The data analysis results showed that the general managers’ perceptions of the group’s IS control function reduced their self-interest orientation, and perceptions of the group’s IS information function enhanced their strategic orientation. The managers’ strategic orientation positively predicted the performance of the subsidiary. Their psychological ownership of the subsidiary positively affected their strategic orientation and negatively influenced their self-interest orientation. In addition, the two types of perception of the group’s IS had a substitute moderating effect on the relationships between psychological ownership and the managers’ self-interest orientation and strategic orientation, respectively. Specifically, perception of the controlling function of the group’s IS had a substitute moderating effect on the negative relationship between psychological ownership and self-interest orientation. The perception of informational function had a substitute moderating effect on the positive relationship between psychological ownership and strategic orientation. Unexpectedly, the relationship between self-interest orientation and the performance of the subsidiary was non-significant.

The innovations of this research are as follows:
First, distinct from previous research focusing on one-way governance by parent companies at the macro level, this study pays more attention to the cognition, motivation and behaviours of the general managers of subsidiaries, and reveals the influence of the control mechanism, incentive mechanism, and information value mechanism at the micro level. Previous studies have mainly discussed the role of control mechanisms (one-way control of the parent company over subsidiaries, the role of the board, and the role of the supervisory board) and incentive mechanisms (equity structure, equity incentives), but have ignored the psychological cognition, motivation and behaviours of the general managers of subsidiaries. This study proposes a new control mechanism, general managers’ cognitive evaluation of the controlling function of the group’s IS; an information value mechanism, the general manager’s cognitive evaluation of the group’s IS information function; and an incentive mechanism, the general manager of the subsidiary company’s psychological ownership of the subsidiary. This research also reveals the effects of these three mechanisms on general managers’ speculation tendency and risk aversion tendency as well as the performance of the subsidiary, which remedies the shortcomings of previous corporate governance research.

Second, this research focuses on the principal–agent problem of parent and subsidiary companies, based on the perspectives of control, incentive and information value mechanisms. It innovatively proposes an interaction process among the three mechanisms and provides empirical evidence to support this proposition. Most previous research has explored the roles of control mechanisms and incentive mechanisms in the principal–agent problem separately. This study examines the synergy of different mechanisms in the parent–subsidiary governance process, highlighting the roles of cognitive evaluation of the group’s IS function and psychological ownership in solving the problem of information asymmetry and principal–agent problems.

Third, this research integrates a group’s IS function with cognitive evaluation theory in organisational behaviour research for the first time, and sheds new light on how to conduct interdisciplinary integrated research. This study extends research in the field of IS to the field of corporate governance and explores the role and effect of subsidiary general managers’ cognitive evaluations of a group’s IS functions. It also extends cognitive evaluation theory by innovatively proposing that the information function of a group’s IS reflects the perception of how quickly the IS can provide timely work-related information. The perception of a group’s IS information function can reduce the risk aversion tendency of a subsidiary’s general manager, promote strategic behaviour, and ultimately improve the performance of the subsidiary. In addition, the general manager’s perception of the group’s IS control function reflects the group’s IS’s monitoring of the general manager’s behaviour and power, which extends the original control function’s impact on individuals’ intrinsic motivation to the concrete control of behaviour and power, and further inhibits the general manager’s self-interest orientation, which helps to indirectly improve the performance of the subsidiary.

Date of Award	9 Nov 2021
Original language	Chinese (Traditional)
Awarding Institution	City University of Hong Kong
Supervisor	Hong LING (External Supervisor) & Kai H. LIM (Supervisor)