How to Achieve Strategic Synergy in China’s Large SOE Groups? A Qualitative Comparative Analysis Focusing on Control Efficacy

Sun Chunyan, Wang Fengbin

Foreign Economics & Management Vol. 45, Issue 09, pp. 135 - 152 (2023)  DOI:10.16538/j.cnki.fem.20220809.101

Summary

Promoting synergy is an important function of headquarters in business groups. But there is not clear and consisitent knowledge of the paths to strategic synergy in extant literarure, with controversial views of imposing control versus assigning autonomy. From the view of affordance and based on the comparison of instrumental rationality and other related constructs, a new construct named control efficacy is developed. Then this study takes 104 large state-owned enterprises as samples and examines the conjunctive effects, via qualitative comparative analysis (QCA), on strategic synergy of specific control mode and its multi-dimensional efficacies as well as contextual conditions, including the way of setting up and the degree of cultural integration of the business group, from the configurational perspective. The results show that there exist a number of equifinal paths to realize strategic synergy in business groups, including srong strategic and operational control, strong operational control combined with the context that the corporate parents are not formed through the simple aggreation of pre-existed subsidiaries or with a high degree of cultural integration, strong strategic control combined with high control efficacies, and weak control combined with high control efficacies. There are more paths to realize strategic synergy when headquarters impose stronger overall control over subsidiaries. The causality for not realizing strategic synergy is the co-presence of low operational control and low control efficacies. This study deepens the mid-range theory on the relationships between control modes and strategic synergy in the context of transition economy and provides practical guidances for group executives to promote strategic synergy through selecting suitable control modes.

Keywords

strategic synergy; efficacy; control; business group; qualitative comparative analysis