Multinational enterprises’ subsidiary density and subsidiary survival: An attention-based perspective

Multinational enterprises (MNEs) often develop an extensive network of foreign subsidiaries within a host country. However, due to the limited attention capacity of managers at MNE headquarters (HQ), the degree to which each subsidiary in such a host market receives positive attention from the HQ is constrained. Our paper adopts the attention-based view to argue that greater subsidiary density of a focal MNE in a host market increases subsidiary mortality propensities. Additionally, we argue that this effect is moderated by important attention regulators such as the subsidiary's relatedness to the MNE HQ, the order of the subsidiary’s entry into the host market, and the subsidiary’s establishment mode. We test our hypotheses using a sample of 1718 foreign subsidiaries of 255 Finnish MNEs operating in 70 host countries. Overall, our paper contributes to the literature by conceptualising MNE-subsidiary density as an attention-based construct and studying its impact on subsidiary mortality.