ABSTRACT
The current recession has underscored poor performance of many Japanese multinationals. It has been argued that one of the reasons may be the inadequate integration of local managers into the global management infrastructure of Japanese firms.
This study is based on a survey of top local executives in 32 Japanese affiliates in the USA. The study deals with three core questions related to the globalization of management: To what extent does the globalization of decision making influence performance of Japanese subsidiaries overseas? What is the linkage between involvement in decision making by local managers and subsidiary performance? And finally, what are the perceived benefits of genuine globalization?
The results show that high globalization of business activities is strongly correlated with the achievement of most performance objectives, but is negatively associated with most measures of job satisfaction. Key performance measures are also strongly associated with an increased input from local executives. Subsidiaries where local executives perceived a smaller globalization gap performed significantly better. There is no doubt that the severity of global competition will force Japanese multinationals to rethink their policies with respect to local management. They have no choice if they want to survive.
