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Institutional distance and foreign subsidiary performance in emerging markets: moderating effects of ownership strategy and host-country experience

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posted on 2023-06-09, 02:59 authored by Vikrant ShirodkarVikrant Shirodkar, Palitha Konara
Institutional distance has been known to be an important driver of Multinational Enterprises’ strategies and performance in host countries. Based on a large panel dataset of 10562 firms operating in 17 emerging markets and spanning 80 home countries, we re-examine the relationship described by Gaur and Lu (2007) between regulatory institutional distance and subsidiary performance. We extend this research by (1) examining this relationship in the context of emerging markets, (2) examining the moderating effects of ownership strategy and host-country experience within the context of emerging markets and (3) accounting for a greater variety of institutions by including a large number of home and host countries. We find that institutional distance negatively affects subsidiary performance in emerging markets. Our findings also show that the negative effects of institutional distance on subsidiary performance are lesser for subsidiaries with partial ownership (than for subsidiaries with full ownership) and for subsidiaries with greater host-country experience. We discuss our findings with respect to Gaur and Lu’s model, which explores the relationships between these variables in a general context.

History

Publication status

  • Published

File Version

  • Published version

Journal

Management International Review

ISSN

0938-8249

Publisher

Springer Verlag

Issue

2

Volume

57

Page range

179-207

Department affiliated with

  • Business and Management Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2016-09-20

First Open Access (FOA) Date

2016-09-20

First Compliant Deposit (FCD) Date

2016-09-20

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