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Seeing the tree and the forest: Japanese auto firm multinational dispersion, cultural distance, and foreign manufacturing subsidiary ownership levels

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  • K. Skylar Powell

    (Western Washington University)

  • Eunah Lim

    (Western Washington University)

  • Naoki Ando

    (Hosei University)

Abstract

Firms may pursue greater equity ownership in foreign manufacturing subsidiaries to limit internal costs of coordinating and communicating with culturally dissimilar host-country partners. We offer that this relationship is strengthened when a firm’s multinational network is more geographically dispersed, or dispersed in terms of national cultural contexts, because a highly dispersed multinational network may also make coordination difficult. With a panel of 7422 firm-year observations (1993–2016) from 541 foreign manufacturing subsidiaries (32 Japanese parent automotive firms), we find the positive cultural distance and equity ownership relationship is positively moderated by geographic and cultural dispersion within parent firms’ multinational networks.

Suggested Citation

  • K. Skylar Powell & Eunah Lim & Naoki Ando, 2021. "Seeing the tree and the forest: Japanese auto firm multinational dispersion, cultural distance, and foreign manufacturing subsidiary ownership levels," Asian Business & Management, Palgrave Macmillan, vol. 20(2), pages 163-187, April.
    • Handle: RePEc:pal:abaman:v:20:y:2021:i:2:d:10.1057_s41291-019-00087-x
    DOI: 10.1057/s41291-019-00087-x
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