Publication

Business group affiliation and foreign subsidiary performance

Castaldi, S., Gubbi, S. R., Kuns, V. E. & Beugelsdijk, S., Nov-2019, In : Global Strategy Journal. 9, 4, p. 595-617 23 p.

Research output: Contribution to journalArticleAcademicpeer-review

Copy link to clipboard

Documents

  • Business group affiliation and foreign subsidiaryperformance

    Final publisher's version, 2 MB, PDF document

    Request copy

DOI

Research Summary Business group (BG) affiliation affects the strategic behavior and performance of firms. Until now it has been theoretically unclear and insufficiently empirically tested whether affiliation advantages extend to the foreign subsidiaries of group members. We attempt to determine if they do, and if so, to identify the boundary conditions that matter. We analyze a large panel of 451 foreign subsidiaries of 136 Indian multinational firms over the 2003-2012 period and find that BG affiliation does enhance foreign subsidiary performance when host-market institutions are weak and when the parent is in manufacturing. Managerial Summary Our research speaks directly to managers of multinational firms who seek to leverage the benefits of BG affiliation across national borders. We show that BG affiliation is only beneficial when the foreign subsidiary is located in a country characterized by weak institutions and when the parent is in manufacturing. If, on the other hand, the foreign subsidiary is in a country with well-functioning institutions and the parent in services, managers will not be able to count on BG advantages, rather they will have to develop competitive capabilities locally, that is, the foreign subsidiary will have to function more like a standalone firm.

Original languageEnglish
Pages (from-to)595-617
Number of pages23
JournalGlobal Strategy Journal
Volume9
Issue number4
Early online date30-Sep-2019
Publication statusPublished - Nov-2019

    Keywords

  • business groups, foreign subsidiary, institutional quality, subsidiary performance, ENTRY MODE CHOICE, INTERNALIZATION THEORY, MULTINATIONAL-ENTERPRISE, INSTITUTIONAL CHANGES, EMERGING MARKETS, RESISTANT RULES, CAPITAL-MARKETS, RESOURCE, STRATEGY, FIRMS

View graph of relations

ID: 100466073