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International subsidiary performance of Indian multinationals in the extractive sector: The role of institutional quality, corruption and investment regime

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  • Das, Khanindra Ch.
  • Mahalik, Mantu Kumar

Abstract

The paper examines the impacts of host country's institutional quality, corruption perception, investment regime, economic growth and resource availability on performance of 150 overseas subsidiaries of Indian multinationals spread across 42 host countries in the extractive sectors of metals and mining during 2005–2017. The dynamic panel data estimation suggests that overseas subsidiary performance is better in countries with superior institutional quality. However, the impact of corruption perception has been sample specific. Further, performance of such subsidiaries was found to be better in countries with underdeveloped investment regime and where the competition from other investors is lower. The economic growth in the host country plays limited role in improving subsidiary performance as these subsidiaries are driven by resource-seeking motive rather than seeking local market. While institutional quality and investment regime are important determinants of subsidiary performance; the role of corruption, economic growth and resource availability in determining the subsidiary performance in the extractive sectors was found to be contrary to conventional expectation, which suggests that the direction of impact of host country-specific variables on subsidiary performance can significantly vary based on the motive of foreign direct investment.

Suggested Citation

  • Das, Khanindra Ch. & Mahalik, Mantu Kumar, 2020. "International subsidiary performance of Indian multinationals in the extractive sector: The role of institutional quality, corruption and investment regime," Resources Policy, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:jrpoli:v:67:y:2020:i:c:s0301420719308475
    DOI: 10.1016/j.resourpol.2020.101664
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    Cited by:

    1. Munmi Saikia, 2022. "Good institutions, more FDI? Evidence from Indian firm-level data," International Economics and Economic Policy, Springer, vol. 19(3), pages 411-436, July.
    2. Das, Khanindra Ch. & Mahalik, Mantu Kumar, 2023. "Renewable energy use and export performance of manufacturing firms: Panel evidence from six industries in India," Energy Economics, Elsevier, vol. 125(C).
    3. Khanindra Ch. Das, 2022. "Tax provisioning by extractive industry multinational subsidiaries," WIDER Working Paper Series wp-2022-133, World Institute for Development Economic Research (UNU-WIDER).
    4. Das, Khanindra Ch & Mahalik, Mantu Kumar & Sadorsky, Perry, 2023. "Tax provision by international subsidiaries of Indian extractive industry multinationals: Do environmental pollution and corruption matter?," Resources Policy, Elsevier, vol. 80(C).
    5. Qiyong Chen & Shiyu Chen & Changfeng Shi & Qinghua Pang & Ang Li, 2021. "Evaluation of agricultural investment environment in countries around the Black Sea under the background of The Belt and Road," Natural Resources Forum, Blackwell Publishing, vol. 45(4), pages 464-483, November.

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