Legitimacy and multi-level institutional environments: implications for foreign subsidiary ownership structure
In this study, we examine from an institutional perspective the legitimacy rationale behind the choice of subsidiary ownership structure among multinational corporations (MNCs). We suggest that, when under a strong pressure to conform at the host country and local industry levels of their institutional environment, MNCs are likely to take a lower ownership stake in exchange for external legitimacy in the host country or local industry that their foreign subsidiaries are entering. We also suggest that MNCs are likely to take a higher ownership stake in response to strong internal pressure to sustain their internal legitimacy at the corporate level of their institutional environment. We also propose that MNCs are more likely to exchange ownership for legitimacy in local industries than in host countries, and in local markets with a high level of political instability than in those with a low level of political instability. These propositions are generally supported by our analysis of 4451 subsidiaries established by 898 Japanese MNCs that operated in 39 countries across 52 industries (two-digit SIC) between 1988 and 1999. Journal of International Business Studies (2007) 38, 621–638. doi:10.1057/palgrave.jibs.8400283
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 38 (2007)
Issue (Month): 4 (July)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/|
Web page: https://aib.msu.edu/
|Order Information:||Web: http://www.springer.com/business+%26+management/journal/41267/PS2|
When requesting a correction, please mention this item's handle: RePEc:pal:jintbs:v:38:y:2007:i:4:p:621-638. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.