Business Group Affiliation and Foreign Subsidiary Performance

Sarah Castaldi*, Sathyajit R. Gubbi, Vincent E. Kunst, Sjoerd Beugelsdijk

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Resumé

Research Summary : Business group (BG) affiliation affects the strategic behavior and performance of firms. Until now it has been theoretically unclear and insufficiently empirically tested whether affiliation advantages extend to the foreign subsidiaries of group members. We attempt to determine if they do, and if so, to identify the boundary conditions that matter. We analyze a large panel of 451 foreign subsidiaries of 136 Indian multinational firms over the 2003–2012 period and find that BG affiliation does enhance foreign subsidiary performance when host‐market institutions are weak and when the parent is in manufacturing.
Managerial Summary : Our research speaks directly to managers of multinational firms who seek to leverage the benefits of BG affiliation across national borders. We show that BG affiliation is only beneficial when the foreign subsidiary is located in a country characterized by weak institutions and when the parent is in manufacturing. If, on the other hand, the foreign subsidiary is in a country with well‐functioning institutions and the parent in services, managers will not be able to count on BG advantages, rather they will have to develop competitive capabilities locally, that is, the foreign subsidiary will have to function more like a standalone firm.
OriginalsprogEngelsk
TidsskriftGlobal Strategy Journal
Vol/bind9
Udgave nummer4
Sider (fra-til)595-617
Antal sider23
ISSN2042-5791
DOI
StatusUdgivet - nov. 2019

Emneord

  • Business groups
  • Foreign subsidiary
  • Institutional quality
  • Subsidiary performance

Citer dette

Castaldi, Sarah ; Gubbi, Sathyajit R. ; Kunst, Vincent E. ; Beugelsdijk, Sjoerd. / Business Group Affiliation and Foreign Subsidiary Performance. I: Global Strategy Journal. 2019 ; Bind 9, Nr. 4. s. 595-617.
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Business Group Affiliation and Foreign Subsidiary Performance. / Castaldi, Sarah ; Gubbi, Sathyajit R.; Kunst, Vincent E.; Beugelsdijk, Sjoerd.

I: Global Strategy Journal, Bind 9, Nr. 4, 11.2019, s. 595-617.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskning

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