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Protectionism and its Impact on MNC Subsidiaries’ Performance

Author

Listed:
  • Pervez N. Ghauri

    (Birmingham Business School University of Birmingham)

  • Shufeng Simon Xiao

    (Sookmyung Women’s University)

  • Byung Il Park

    (Hankuk University of Foreign Studies College of Business)

  • Seong-Jin Choi

    (Hanyang Business School, Hanyang University)

Abstract

This study investigates the relationship between local protectionism and performance of multinational corporation (MNC) subsidiaries in China. We integrate overarching theories (i.e., institutional theory and extended resource-based view) to investigate a model for identifying whether local protectionism at the subnational level is beneficial or detrimental for foreign subsidiary operations or functions as a double-edged sword. We also examine whether or not internal organizational capabilities and relational capital with government moderate the effects. On the basis of regression analyses, our empirical findings reveal that the positive or negative effects of subnational protectionism in China depend on performance types. Moreover, performance contribution is considerably moderated by various internal capabilities of MNC subsidiaries. Findings offer valuable and practical implications for MNCs intending to invest in emerging economies.

Suggested Citation

  • Pervez N. Ghauri & Shufeng Simon Xiao & Byung Il Park & Seong-Jin Choi, 2023. "Protectionism and its Impact on MNC Subsidiaries’ Performance," Management International Review, Springer, vol. 63(5), pages 731-757, October.
    • Handle: RePEc:spr:manint:v:63:y:2023:i:5:d:10.1007_s11575-023-00519-z
    DOI: 10.1007/s11575-023-00519-z
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