Unbundling the effects of host-country institutions on foreign subsidiary survival: A case for subsidiary heterogeneity

Paul W. Beamish, Yamlaksira S Getachew

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Abstract

This study seeks to advance a fine-grained understanding of the relationship between host-country institutions and foreign subsidiary survival by unbundling host-country institutions into contracting institutions and property rights institutions as well as engaging subsidiary-level heterogeneity. We argue that the adverse effects of weak contracting institutions are stronger for market-seeking subsidiaries than resource-seeking subsidiaries. In contrast, we contend that weak property rights institutions are more detrimental to the survival of resource-seeking subsidiaries. Data from a longitudinal, paired-sample design of Japanese foreign subsidiaries operating across 46 countries provide support for these arguments. These results (a) contribute to gaining a more fine-grained understanding of whether and how institutions relate to subsidiary survival and (b) underscore the need to better understand institutional diversity as well as subsidiary heterogeneity
Original languageEnglish
JournalJournal of World Business
Volume56
Issue number4
Early online date4 May 2021
DOIs
Publication statusE-pub ahead of print - 4 May 2021

Keywords

  • Contracting institutions
  • property rights institutions
  • foreign subsidiary survival
  • market-seeking subsidiaries
  • resource-seeking subsidiaries

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