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

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  • Getachew, Yamlaksira S.
  • Beamish, Paul W.

Abstract

This study seeks to advance a fine-grained understanding of the relationship between host-country institutions and foreign subsidiary survival by unbundling institutions into contracting 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. 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. The results underscore the need to better understand institutional diversity as well as subsidiary heterogeneity.

Suggested Citation

  • Getachew, Yamlaksira S. & Beamish, Paul W., 2021. "Unbundling the effects of host-country institutions on foreign subsidiary survival: A case for subsidiary heterogeneity," Journal of World Business, Elsevier, vol. 56(4).
    • Handle: RePEc:eee:worbus:v:56:y:2021:i:4:s1090951621000389
    DOI: 10.1016/j.jwb.2021.101226
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