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Regulatory institutional distance and MNCs' subsidiary performance: climbing up Vs. climbing down the institutional ladder
journal contribution
posted on 2023-06-09, 13:15 authored by Palitha Konara, Vikrant ShirodkarVikrant ShirodkarWe investigate the possibility of regulatory institutional distance exerting an asymmetric effect on multinational corporations' (MNCs') subsidiary performance depending on the direction of institutional distance. We use the term ‘institutional ladder’ to differentiate between upward distance, referred to as when the subsidiary is operating in a relatively stronger institutional environment than its parent-firm's home country, and downward distance for vice versa. Combining institutional theory with organisational imprinting and learning perspectives, we argue that the implications of regulatory institutional distance on subsidiary performance are relatively more positive (or less negative) when MNCs are climbing down the institutional ladder as compared to when MNCs are climbing up the institutional ladder. We also argue that subsidiary ownership strategy – i.e. the choice of a wholly owned subsidiary (WOS) versus joint venture (JV) – moderates the above-mentioned implications of institutional distance on subsidiary performance. We test these hypotheses based on a panel data-set of 1936 foreign subsidiaries representing 70 host countries and 66 home countries and spanning the 12-year period: 2002–2013.
History
Publication status
- Published
File Version
- Accepted version
Journal
Journal of International ManagementISSN
1075-4253Publisher
ElsevierExternal DOI
Issue
4Volume
24Page range
333-347Department affiliated with
- Strategy and Marketing Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2018-05-15First Open Access (FOA) Date
2020-05-09First Compliant Deposit (FCD) Date
2018-05-10Usage metrics
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