ESLSCA Business School – Egypt

Enhancing the Performance of a Subsidiary in

Egypt Continued to an Indian Information
Technology Company

By
Ahmed S. El-Hamaky

Supervised By
Dr. Ashraf El-Safty

This paper was submitted in partial fulfillment of the requirements for the degree of

“MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION (MIBA)”

At
ESLSCA BUSINESS SCHOOL

August 2015

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Acknowledgment

Firstly, great thanks to Allah almighty who guided my steps and put the right people on my
way to help me finish this work and gave me my great family (my mother, my wife, and my
kids) who bear with me and provide all required support to successfully finish my MBA.

Secondly, I wish to dedicate this paper to my late father, who taught me persistence and
eagerness to seek knowledge and empowered me to make my own judgments. His advices
have always enlightened my way. I know this moment would have made him very proud.

I would like to express my deep thanks and appreciation to my supervisor Dr. Ashraf El-Safty.
His guidance and support have helped me so much to complete this research paper. I would
like also to extend my thanks to all the professors who instructed me at Eslsca Business
School. They enlightened my way with their experience, support and encouragement.

Finally, special thanks to all my classmates who have made it a real joy and great value added
experience.

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Abstract

Many IT MNCs have to internationalize their business through establishing subsidiaries in

foreign countries like Egypt. This paper investigates decisions and actions required from an
Indian Information Technology MNC’s top management to enhance the performance of its
subsidiary in Egypt. This paper explore some managerial and organizational factors that
influence the performance of a subsidiary in Egypt. This paper assumes that four factors;
which are Collective Organizational Engagement, Knowledge Transfer, CEO’s Attention &
Leadership behavior and Strategic planning; influence subsidiary performance. It also
assumes that Indian uniculturalism of mother company has an impact on all those factors.

Keywords: IT MNC, Subsidiary Performance, Egypt, Knowledge Transfer, Indian Culture,

Effective HRM, Collective Organization Engagement, Strategic Planning, CEO’s Attention,
CEO’s Leadership Behavior

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Table of Content

Acknowledgment....................................................................................................................ii
Abstract..................................................................................................................................iii
Table of Content....................................................................................................................iv
List of Figures.........................................................................................................................vi
List of Abbreviations.............................................................................................................vii
1. Introduction...........................................................................…………………………….................01
4.1. Overview.........................................................................................................01
4.2. Business Analysis.............................................................................................03
4.3. Preliminary Meetings with Stakeholders……………………………………………………..08
4.4. Problem Statement.........................................................................................09
4.5. Research Objective..........................................................................................09
4.6. Research Question ..........................................................................................09
4.7. Research Assumptions ………………………………………………………………………………..09
4.8. Research Limitations……………………………………………………………………………………09
2. Literature Review...........................................................................…………….........................10
2.1. HR Management, Motivation, and Collective Organization Engagement….….10
2.2. Strategic Planning …………………………………………...............................................11
2.3. Knowledge Transfer………………………………………….………………………………………...12
2.4. CEO’s Attention & Leadership Behavior……………………………………………………….14
2.5. Preliminary Conceptual Model........................................................................17
3. Theoretical Framework & Research Design……....................................................................19
3.1. Theoretical Framework...................................................................................19
3.1.1. Dependent Variables............................................................................19
3.1.2. Independent Variables.........................................................................19
3.1.3. Moderating Variables ..........................................................................20
3.1.4. Research Assumptions .........................................................................20
3.1.5. Research Limitations ……………………………………………………………….……….20

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3.2. Research Questions.........................................................................................21

3.2.1. Major Questions ..................................................................................21
3.2.2. Minor Questions ..................................................................................21
3.2.3. Hypothesis ...........................................................................................21
3.3. Research Methodology...................................................................................23
Conclusion……………………………………………………………………………………………………………………….24
References............................................................................................................................25

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List of Figures

Figure 2.1 – Model of Collective Organizational Engagement ............................................11

Figure 2.2 – The Contingency Model of MNC’s International strategy................................13
Figure 2.3 – Context-Fit-Performance Model.................................................................…...15
Figure 2.4 – Preliminary Conceptual Model.........................................................................17

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List of Abbreviations

HR Human Resource
HRM Human Resource Management
HQ Headquarter
ID Information Dynamics
IT Information Technology
MNC Multinational Corporation
R&D Research & Development

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1. Introduction

1.1 Overview

Information Dynamics L.L.C. (ID), a member of the Sharaf Group of Companies (UAE), is an
IT Solutions Provider company established in 1995 and headquartered in Dubai, UAE with
three people (Indian) to fulfil the internal requirements of group companies in terms of IT
solutions/services.

From 1998 onward, ID has expanded to sell its products to other companies in UAE and Gulf
Region. In 1999, ID established its branch in Chennai - India and moved most of software
development operations to the new branch in order to reduce the cost and easily get
qualified technical resources.

Currently, ID has more than 2000 clients over 58 countries served by 350+ technical
members operate from various centers across nine countries (UAE, Oman, Saudi Arabia,
Qatar, Bahrain, India, Kenya, South Africa, and Egypt), and services various vertical
industries, like Shipping & Logistics, Retail & Distribution, Travel & Airlines and
Transportation.

ID also has a sub-company called iBox Technology which is an international organization

providing exclusive IT solutions to MSC (Mediterranean Shipping Company S.A.) Agencies
worldwide through MSC Geneva H.O.

In 2007 and due to the rapid increase of business opportunities in Arabic Speaking countries,
ID top management decided to expand to Egypt by establishing a subsidiary to handle sales,
implementation, and technical support for Business Solutions powered by Information
Technology to the Travel & Tourism, Shipping, Warehousing, and Retail industry.

So far, ID top management (CEO) has not changed over the past 20 years and all top &
middle managers in HQ are Indian nationality. Although all existing branch & regional

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managers have worked for minimum of 3 years in Dubai Headquarter then were promoted
based on their performance and trust to manage new branches and transfer knowledge to
new staff, There are many problems in management level between HQ & branches mostly
related to unclear objectives, miscommunication and cross-culture differences effect on
branches’ overall performance.

1.2 Business Analysis

By year 2007, ID has established its subsidiary in Egypt as a Branch Office for the Dubai based
L.L.C subject for Egypt’s foreign investment law.

The main purpose of the new branch is to handle sales, implementation, and technical
support for Business Solutions powered by Information Technology to the Travel & Tourism,
Shipping, Warehousing, and Retail industries.

The main targeted geographical area is Egypt, Sudan, Yemen, Jordan, Syria, Libya, and Saudi
Arabia (Western Area).

Egypt was selected due to its location nearby the targeted area and availability of high
performance technical human resources with low cost in comparison to Dubai. In addition
to this, ID already has Egyptian staff who are reliable, preforming very well, willing to
relocate to Egypt, and capable of transferring required knowledge to the new team.

By Jan 2008, ID could start its operation in Egypt with one business unit that covers Travel
& Tourism Industry. Before end of 2008, another business unit for Shipping & Logistics could
be established. So far, the headcount of the branch office is nine persons.

Starting with four corporate customers in 2008, as of now there are 40+ corporate
customers (from enterprises to small-size companies) distributed over eight countries are
covered and supported by Egypt Office.

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There are high opportunities to increase the business done through Egypt office either
inside Egypt or in the targeted countries. As a Branch Manager, there are observations of
many internal obstacles that need to be identified and handled first in order to achieve the
targeted high performance.

In the next section, we will try to describe those observations in order to identify the broad
problem area.

- Management Function:
ID Top management in Dubai does not setup long-term plans for the running
business but focus only on how to make control over human resources
distributed worldwide.
Since ID started in 1995 and it is fully controlled by the CEO without sharing
decision-making with others or give empowerment to facilitate work. Until
moment and regardless of the huge increase in company size, he keeps
centralized control on all aspects. There is no strategic management at all
(Vision & Mission are not clearly defined and Strategic goals are missing) and
the main/only goal is just to achieve the sales target and reduce the cost
regardless of any other concerns.
ID has no such planning department, HR Department or Marketing Department
on the company level and it depends on branch managers to handle those
activities from their own perspectives without providing the required
empowerments/authorities and under full control of head office. Hence,
cooperative between branches is missing and many conflicts/problems happen
because of the missing of common objectives.
The last Board of Directors Meeting held on Dec. 2009, since that time ID Top
management used to arrange for individual meetings held in Dubai once per
year with each branch manager separately to discuss his progress towards
achieving the last year target and next year business plan. Even they might

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cancel that individual interview with a Branch manager as long as target is

achieved to avoid discussing requirements/problems raised by branch
managers.
As a Branch manager, I requested many times to arrange for a meeting(s) with
ID Top Management and other branch managers to discuss all existing
problems and the future plans but those requests have not been approved yet.
As ID Top management (CEO) does not take any correction actions toward
those problems/requirements:
 A huge delay in decision-Making affects Business growth opportunities.
 Absence of collaboration between branches leads to losing business
opportunities.
 Business Plans do not being implemented effectively.
 Absence of Human Resource Management affects innovation and
productivity of employees.
- Business Functions:
o HR, although no. of employees exceeds 350 employees globally but no HR
manager exists. It is branch managers’ responsibility to handle all tasks related
to HR Management. ID top management does not consider Human Resources
as assets but just think on them as a cost in such a way that no investment in
career development or training take place and each individual has to enhance
his skills by himself. ID motivates its staff only by the experience they will get
from working in the company that is suitable for juniors who seeks for
experience. ID does not provide suitable salaries and focus on hiring Indian staff
who accept low salaries.
As a result for this:
 Recruitment & Selection Processes for new joiner mainly depends on the
cheapest, which affects the expected performance level.

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 Deficiency of Training (Internal & External) affects the performance &

innovation.
 Unbalanced Work-life percentage leads that many employees are
looking for another job and loosing of experienced members.
 Unsuitable Salary packages (Compensations & Benefits) leads that many
employees search for better jobs once they get the required experience.
 Failing of Motivation (Tangible & Intangible) affects the performance and
employees’ satisfaction.
o R & D, ID does not have R&D department but depends on collecting new
requirements raised by existing customers and develop it only if a customer
insists to get and ready to pay for that.
As a result for this:
 Software Products’ Road Map are not defined.
 Many software products are outdated in terms of technology/Business
features and customers’ requirements.
o Products/Service, existing products need to be upgraded by using new
technologies and adding additional features. For example, it was planned to
release the new version of Travel & Tourism Solution in 2010 but this does not
take place until moment and even no clear dates about that. Technical team
also is not ready to adapt products based on market requirements.
As a result for this:
 Existing customers look for other providers who can deliver their
requirements.
 Loosing many new business opportunities.
o Knowledge, only few people (mostly located in India branch) own the
knowledge and they do not share with others. Even, they do not write in
documentation.

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As a result for this:

 High difficulties in Knowledge transfer.
 Many employees are frustrated and their performance affected.
 People who own the knowledge get more power over company’s roles.
o Marketing, no marketing specialists exists and sales team depends on their
relationships and referrals to generate new clients. Marketing activities and
events are so rare in order to reduce expenses. Sales team has no authority to
push technical team to develop new products/modules that are required by
customers/market.
As a result for this:
 Weakness of establishing new business opportunities.
o Information Technology, ID depends on manual reports to make control over
sales, support, and other activities. Although some existing IT products are
available and in use but it’s not implemented in efficient manner to provide
customers/management with required reports.
As a result for this:
 Top Management are not able to get sufficient MIS reports.
 Middle Managers & First-Line Managers put much time to prepare
manual reports to deliver to higher management.
 Insufficient utilization for existing resources.
o Finance & Accounting, an authorization is required from head office on any
expenses in any branch office. Two signatures are required for any payments
(one for branch manager and the other for the CEO). Although Budget plan is
approved before year starts, but management focuses on achieving Income
part and ignore budgeted expenses like marketing, training, etc…
As a result for this:
 A delay in decision-making that affects operations.

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 Incorrect decisions based on reducing cost that affects business growth.

- Internal Environment:
o Customers, customers suffers from the delay in providing required support as
Egypt team has to revert back to India team to get certain levels of support. In
addition to this, customers in Egypt suffer from the high cost of annual
maintenance charges comparing with others. They also keep asking about new
versions/releases or web version of products that have not update since long
time.
o Employees, they suffer from low salaries comparing with equivalents and
absence of training and career development.

1.3 Preliminary Meetings with Stakeholders

The interview with the CEO (Indian Nationality) indicates that he believes in the following:

- Employees have to change by themselves first in order to get things change inside the
company.
- Employees have to work harder to be fully utilized with work and to achieve their
targets regardless of their personal responsibilities. It is also their responsibilities to
develop their skills to deserve their job.
- Head Quarter in Dubai has to be involved in any decision making to be sure that cost
at minimal and the output will increase the revenue.
- General Managers & Branch Managers have to work on their own business plans
individually then top management has to approve from its end.

Interviews with other stakeholders like General Managers, Branch Managers & other
employees (Indian & Egyptian Nationalities) with different designations indicate that they
have the following observations:

- The company vision & mission is not clear as well as goals and objectives.

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- They are not involved in decision-making process and they do not have enough
empowerment / authority to motivate their subordinates.
- Motivation & Career Development are missing inside the company.
- Workload is higher than their capabilities with no intention to increase the
headcount.
- Salaries are not equivalent to the workload or the personal responsibilities they have.
- For Egyptians, Knowledge Transfer is missing and they have to depend on India team
to get their tasks done with low cooperation.

1.4 Problem Statement

Whereas, a Dubai based fast growing IT organization has internationalized its operations
and established subsidiaries in many other countries, meanwhile the Top management
(CEO) has not changed since started and over years, and the corporate culture is so much
affected with Indian culture (nationality of founders and majority of employees). Therefore,
there are some missing organizational factors with negative impacts on the performance of
subsidiaries and their cooperation with each other’s.

1.5 Research Objective

The research objective is to study and suggest the required internal decisions and actions of
MNC Top management that enhance the performance of the Subsidiary in Egypt and
establish a better cooperation with HQ and other branches.

1.6 Research Question

How can the Top Management of an Indian information Technology MNC enhance the
Performance of its subsidiary in Egypt?

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1.7 Research Assumptions

Assumption 1: There is a political, Social, and economic stability in Egypt.
Assumption 2: There are available opportunities to enhance the financial and
operational performance of the subsidiary in Egypt.
Assumption 3: There are availability of qualified Human resources in Egypt.

1.8 Research Limitations:

Lim1: Limited to Subsidiaries in Egypt.
Lim2: Limited to Indian Information Technology MNC.
Lim3: limited to the variables included in the suggested model

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2. Literature Review

2.1 HR Management, Motivation, and Collective Organizational Engagement

The Online search indicates that, over the past few decades many companies have to
internationalize their business. Because of this expansion, accompanied increased
international movement of labor and issues related to human resources management
(HRM) (Mahendru & Kaleka, 2011). To support an innovation-oriented business strategy,
strategic human resource management (Strategic HRM) techniques have been adopted
(Cooke & Sainim 2010). Firms with a strategic HR orientation perform significantly better
than those with less assertion on HR do (Singh, 2003). The study of Indian firms in the IT
industry showed that compensation, job design, incentives, and training have a direct
impact on operational performance outcomes such as employee productivity, employee
retention, speed of delivery, product quality, and operating cost (Paul & Anantharaman,
2003). The three main human resource management practices namely employee relations
and communication, job/work design, and career planning have the highest influence on
organizational performance (Osman, Ho, & Galang, 2011). The study of firms in both public
and private sectors in India detected that individuals’ perception of the psychological
climate in the organization had a significant positive impact on their willingness to engage
in organizational citizenship behavior, as well as on their job satisfaction levels (Biswas &
Varma, 2007). Further, organizational citizenship behavior and job satisfaction levels had a
significant impact on individuals’ performance. A consensus from these studies is that
strategic HRM does contribute to enhanced employee commitment to, and behavior
toward, the organization and ultimately organizational performance (Cooke & Saini, 2010).
Barrick and Thurgood (2014) reported a comprehensive theory of collective organizational
engagement, integrating engagement theory with the resource management model. Barrick
and Thurgood (2014) propose that engagement can be considered as an organization-level
construct influenced by motivationally focused organizational practices that represent firm-

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level resources. Specifically, Barrick and Thurgood (2014) evaluate three distinct
organizational practices as resources—motivating work design, human resource
management practices, and CEO transformational leadership—that can facilitate
perceptions that members of the organization are as a whole cognitively, physically, and
emotionally invested at work. This theory is grounded in the notion that, when used jointly,
these organizational resources maximize each of the three underlying psychological
conditions necessary for full engagement; namely, psychological meaningfulness, safety,
and availability. The resource management model also emphasizes the value of top
management team members implementing and monitoring progress on the firm’s strategy
as a means to enhance the effects of organizational resources on collective organizational
engagement. Barrick and Thurgood (2014) present a model of collective organizational
engagement, as shown in Fig. 2.1.

Fig. 2.1 Model of Collective Organizational Engagement

We can conclude that by motivating work designs, implementing an effective HRM
practices, and Transformational leadership behavior of CEO; members are more likely to
develop a collective level of engagement, which, in turn, results in increased firm financial
performance.

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2.2 Strategic Planning

Strategic management is a set of managerial decisions and actions that determines the long
run performance of a corporation. It includes environmental scanning (both internal and
external), strategy formulation (strategic or long-range planning), strategy implementation,
and evaluation and control (Wheelen & Hunger, 2012). Strategic management emphasizes
long-term performance. Many companies can manage short-term bursts of high
performance, but only a few can sustain it over a longer period. To be successful in the long-
run, companies must not only be able to execute current activities to satisfy an existing
market, but they must also adapt those activities to satisfy new and changing markets
(Beinhocker, 2006). Researches indicate that organizations that engage in strategic
management generally have better performance than those that do not (Andersen, 2000;
Hopkins & Hopkins, 1997; Miller & Cardinal, 1994; Pekar & Abraham, 1995; Teagarden, L.F.,
Sarason, Y., Childers, J.S., & Hatfield, 2005; Wirtz, Mathieu, & Schilke, 2007). Managers at
the corporate headquarters (HQ) have to setup a strategy for each of their foreign
subsidiaries, Objectives have to be set, and possible long and short-term paths have to be
determined. Therefore, these strategies should influence the evaluation of the degree of
success of a foreign subsidiary (Ramsey, 2013). Miller and Cardinal (1994) present the
Planning-Performance Model in which strategic planning positively influences firm
performance. Miller and Cardinal (1994) state Strategic planning affects performance more
strongly in case of large firms, firms that are capital-intensive, or firms facing turbulent
environments. Lin (2014) elucidates that tight headquarters control enhances subsidiary
performance when HQ applies a global integration strategy, meanwhile tight headquarters
control decreases subsidiary performance when a local responsiveness strategy takes place.
Lin (2014) also elucidates that high degrees of headquarters uniculturalism enhance
subsidiary performance when HQ applies a global integration strategy, meanwhile high
degrees of headquarters uniculturalism decreases subsidiary performance when a local

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responsiveness strategy takes place. Fig. 2.2 shows the Contingency Model of MNC’s
International strategy.

Fig. 2.2 The Contingency Model of MNC’s International strategy

We can conclude that strategic planning intensity causes better performance; hence, it is
important to identify the firm strategy as well as the subsidiary strategy in order to enhance
the overall firm performance. Subsidiary performance will be affected with the level of
control and uniculturalism of HQ subject to the type of strategy applied.

2.3 Knowledge Transfer

Knowledge transfer includes any action, under which there is disclosure to others what an
individual knows. This process is not only limited to the relocation of a particular body of
knowledge, but it also includes the modify cation of the transferred knowledge for the
purpose of adapting it to be used in another context (Kumar & Ganesh, 2009).
As knowledge creation and diffusion in various ways is geographically bound, the MNCs
must establish subsidiaries in different countries and also transfer knowledge between
these subsidiaries and those countries (Pearce, 1999). One of the main important
competitive advantages of MNCs lies in their ability to create and transfer knowledge from
headquarters to subsidiaries and vice versa (Bartlett & Ghoshal, 1989; Kogut & Zander,
1993). In many global organizations, teams comprising both onshore and offshore members

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increasingly undertake IT software development. Effective transfer of knowledge from

onshore IT units to offshore subsidiaries is central to the success of such software
development projects (Bhagat, Kedia, Harveston, & Triandis, 2002; Chua & Pan, 2008).
Several researches have shown that onshore to offshore knowledge transfer is impeded by
several characteristic IT offshoring-related factors, such as geographical distance and
cultural boundaries (Herbsleb & Grinter, 1999; Levina & Vaast, 2008). Knowledge transfer
ability and willingness are seen as important preconditions for actual knowledge transfer
from the knowledge provider (Minbaeva & Michailova, 2004). Tran, Mahnke, and Ambos
(2010) indicated that the value added by knowledge transfer from headquarters to
subsidiaries depends not only on the quality and quantitative of knowledge flows but also
on their timing so the poorly timed knowledge flows can impede subsidiary performance.
According to (Lahti & Beyerlein, 2000), some factors affect the dissemination of knowledge
at an individual level. Those factors are the capabilities of the sender and recipient to
transfer and receive knowledge, their willingness and awareness of the other’s experience,
together with a common frame of reference, and protectionism by the sender where
employees may want to keep knowledge to themselves, as this would make them more
competitive within their company. There is another factor at organizational level which is
the structure of a firm, can in itself promote the sharing of knowledge. Job descriptions,
project designs, office layout, company vision and collaborative work forms are examples of
structures, which may ease this (Lahti & Beyerlein, 2000).
We can conclude that Knowledge Transfer from Headquarter to subsidiary is an important
factor to enhance the performance especially in IT companies.

2.4 CEO’s Attention & Leadership Behavior

Many researches argued that top management’s attention is the most critical, sought and
scarce after resource in organizations (Bouquet & Birkinshaw, 2008; Hansen & Haas, 2001).
Ambos & Birkinshaw (2010) present the context-fit-performance model in which the more

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attention a subsidiary receives from HQ, and the more strategic choice it has, the higher will
be its performance. Ambos & Birkinshaw (2010) showed that subsidiaries would be able to
benefit most from headquarters’ attention when they have a high level of strategic choice,
i.e. high autonomy, high inter-unit power, and a high level of initiative taking as shown in
Fig. 2.3.

Fig. 2.3 Context-Fit-Performance Model

Firm leaders play a critical role in leveraging organizational resources to generate valuable
capabilities. Hence, it is likely that firm leaders’ knowledge and behaviors regarding a firm’s
strategy contingently affect firm performance based upon how effectively they orchestrate
the firm’s organizational resources (Sirmon, Hitt, Ireland, & Gilbert, 2011).
There is an impact of Indian culture on the management style as Indian social and cultural
values have an impact on the workplace. The Indian employees working abroad at client
sites for Indian IT organizations demonstrated a very submissive attitude in their conduct
(Sahay, Nicholson, & Krishna, 2007). They were found to be fearful to participate in
discussions and expected superiors to offer guidance. They accepted the workload
optimistically even if it was unrealistic and could not be completed on time or required extra
hours of work (Gregory, Prifling, & Beck, 2009; Krishna, Sahay, & Walsham, n.d.; Nicholson
& Sahay, 2001; Upadhya & Vasavi, 2006). Such behavior derives from the Indian belief that
failure to achieve a goal would bring shame on not just self but also family (Sinha & Sinha,
1990). The Indian subordinates do not want to accept responsibility and hence expect their
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superiors to give directions. The superiors also do not want junior participation in decision-
making as it may be thought a sign of weakness in management practice (Tripathi, 1990;
Upadhya & Vasavi, 2006). The fear of employees of making the management unhappy
anyhow has been identified as an important reason why employees are scared to be genuine
with seniors. They would rather suffer in distress than discuss any problems they are having
with work (Sinha, 1973). This leads Indian top managers to expect from other nationalities -
e.g. Egyptians - to behave in same way as Indians without considering cross-cultural
differences.
We can conclude that CEO’ attention is an important factor to achieve subsidiary
performance meanwhile the CEO leadership behavior and considering cross-culture
difference between will lead to enhancing the performance of the subsidiary.

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2.5 Preliminary Conceptual Model

Based on observations, interviews held with stakeholders and initial literature review, we
can illustrate the preliminary conceptual model as in figure 2.4.

Indian Culture
Collective Organizational
Engagement

Knowledge Transfer

Subsidiary Performance
CEO’s Attention &
Leadership Behavior

Strategic Planning

Fig. 2.4 Preliminary Conceptual Model

In the preliminary conceptual model, we assume the following:

- The Subsidiary performance is positively affected with the developing of strategic
Planning inside the organization in order to determine the long-run performance of
the Subsidiary. The environmental scanning (both external and internal), strategy
formulation (strategic or long-range planning), strategy implementation, and
evaluation and control all will support the management toward the most suitable
decisions and actions (Gluck, Kaufman, & Walleck, 1982).
- The Subsidiary performance is positively affected with the Collective Organizational
Engagement. Collective Organizational Engagement is the shared perceptions of
organizational members that members of the organization are, as a whole, physically,
cognitively, and emotionally invested in their work (Barrick & Thurgood, 2014).
- The Subsidiary performance is affected with CEO’ attention and leadership behavior.
Online researches have demonstrated that firm leaders’ resource management
actions impact firm performance, and that managers differ in terms of their resource
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management abilities, which differentially influence firm-level outcomes (Ndofor,

Sirmon, & He, 2011).
- The Subsidiary performance is positively affected with Knowledge Transfer between
subsidiaries and each other’s especially from India Office to others. One of the main
important competitive advantages of MNCs lies in their ability to create and transfer
knowledge from headquarters to subsidiaries and vice versa (Bartlett & Ghoshal,
1989; Kogut & Zander, 1993).
- We assume that Indian culture of majority of employees has a negative influence on
applying Collective Organizational Engagement especially between Egypt Subsidiary
from one side and India office from the other side, which affects the performance.
- We assume that Indian Culture influence the Knowledge Transfer from HQ & India
office to Egypt office which affects the performance of subsidiary in Egypt.
- We assume that Indian culture of the CEO reduces his Attention towards improving
business in Egypt subsidiary meanwhile increase his attention towards India
subsidiary. In addition to this, the Indian Culture of CEO influence his leadership
behavior in way that affects the performance of the subsidiary due to cross culture
differences.
- We assume that Indian culture influence the strategic planning as uniculturalism
mismatches with the current strategy of local representative strategy and so it affects
the performance of the subsidiary in Egypt.

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3. Theoretical Framework & Research Design

3.1 Theoretical Framework

Available management scholars have not covered the suggested variables in one common
theory or model so we will build the proposed model used in this paper is based on the
outcome of business analysis done by the researcher, preliminary interviews done with
stakeholders, and literature review. Our Proposed model for this thesis is depicted in Fig.
2.4.

3.1.1 Dependent Variable

VAR (Y): Subsidiary Performance

Defined as: The Financial, Operational, and Overall effectiveness relative to other
units in the MNC (Hult et al., 2008).

3.1.2 Independent Variables

VAR (X1): Collective Organizational Engagement

Defined as: The degree to which the shared perceptions of organizational members
that members of the organization are, as a whole, physically, cognitively, and
emotionally invested in their work (Barrick & Thurgood, 2014).

VAR (X2): Knowledge Transfer

Defined as: The Degree to which employees are willing and able to transfer of various
types of knowledge to the focal subsidiary from the headquarters and the sister
subsidiaries (Minbaeva & Michailova, 2004).

VAR (X3): CEO’s Attention & Leadership Behavior

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ESLSCA Business School – Egypt

Defined as: The degree of attention and empowerment given by CEO to a subsidiary
for operational and strategic decision-making.

VAR (X4): Strategic Planning

Defined as: The degree of availability, intensity and suitability of Strategic Planning
on Firm & Subsidiary levels.

3.1.3 Moderating Variables

VAR (M1): Indian Culture

Defined as: The cumulative deposit of experience, beliefs, knowledge, values,

attitudes, hierarchies, religion, meanings, notions of time, roles, and norms acquired
by Indian citizens.

3.1.5 Research Assumptions

Assumption 1: There is a political, Social, and economic stability in Egypt.

Assumption 2: There are available opportunities to enhance the financial and
operational performance of the subsidiary in Egypt.
Assumption 3: There are availability of qualified Human resources in Egypt.

3.1.6 Research Limitations

Lim1: Limited to Subsidiaries in Egypt.

Lim2: Limited to Indian Information Technology MNC.
Lim3: limited to the variables included in the suggested model.

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ESLSCA Business School – Egypt

3.2 Research Questions

3.2.1 Major Questions

MjRQ1: How can the Top Management enhance the performance of its subsidiary in
Egypt?

3.2.2 Minor Questions

MinRQ1: Does the Collective Organizational Engagement affect Egypt subsidiary

performance?
MinRQ2: Does the Knowledge Transfer enhance Egypt subsidiary performance?

MinRQ3: Does the CEO’s Attention & Leadership Behavior enhance Egypt subsidiary
performance?

MinRQ4: Does the Strategic Planning enhance Egypt subsidiary performance?

MinRQ5: Does the Indian Culture influence the relation between Collective

Organizational Engagement and Egypt subsidiary performance?

MinRQ6: Does the Indian Culture influence the relation between Knowledge Transfer

and Egypt subsidiary performance?

MinRQ7: Does the Indian Culture influence the relation between CEO’s Attention &

Leadership Behavior and Egypt subsidiary performance?

MinRQ8: Does the Indian Culture influence the relation between Strategic Planning

and Egypt subsidiary performance?

3.2.3 Hypothesis
H1: There is a positive relationship between Collective Organizational Engagement

and the enhancement of Egypt subsidiary performance.

H2: There is a positive relationship between Knowledge Transfer and the

enhancement of Egypt subsidiary performance.

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ESLSCA Business School – Egypt

H3: There is a positive relationship between CEO’s Attention & Leadership Behavior

and the enhancement of Egypt subsidiary performance.

H4: There is a positive relationship between Strategic Planning and the enhancement

of Egypt subsidiary performance.

H5: The Indian Culture does influence the relation between Collective Organizational

Engagement and Egypt subsidiary performance.

H6: The Indian Culture does influence the relation between Knowledge Transfer and

Egypt subsidiary performance.

H7: The Indian Culture does influence the relation between CEO’s Attention &

Leadership Behavior and Egypt subsidiary performance.

H8: The Indian Culture does influence the relation between Strategic Planning and

Egypt subsidiary performance.

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3.3 Research Methodology:

Research Purpose: Exploratory as no information is available on how similar problems or

research issues have been solved in the past.

Research Type: Correlational, to identification of the important factors associated with the
problem.

Research Settings: Contrived & Field Experiment, in the natural environment where work
proceeds normally with the moderate control of the researcher.

Time Horizon: Longitudinal, at multiple points in time using same sample.

Data collection method: Observational Interviews and Questionnaire.

The Unit of Analysis: Individuals.

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Conclusion

This research has explored organizational factors and proposed some strategies to enhance
the performance of a subsidiary office in Egypt continued to an Indian Information
Technology MNC. The research proposes four factors that influence the performance of a
subsidiary which are Collective Organizational Engagement, Knowledge Transfer, CEO’s
Attention & Leadership Behavior, and intensity of Strategic Planning. This research assumes
that the Indian uniculturalism of mother company influence the relation between those
factors and the performance of the subsidiary in Egypt.

The limitations of this research is that it relies only on researcher observations, feedback
received from stakeholders, and literature review. Another limitation in this research that it
does not tackle other major factors affecting the performance of a subsidiary office in Egypt
such as political, social, and economic stability in addition to the availability of qualified
resources needed.

This research has not included empirical validation of the presented model; further research
can involve examining the validity of the proposed model to predict factors required to
enhance the performance of a subsidiary in Egypt.

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