Environmental influences on MNE subsidiary roles: Economic integration and the Nordic countries

Gabriel R. G. Benito*, Birgitte Grøgaard, Rajneesh Narula

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    Abstract

    We seek to examine the importance of environmental factors in determining MNE subsidiary roles. In particular, we examine the environmental factors associated with ‘deep’ integration schemes such as the EU. Such schemes require a convergence of economic structure, due to the establishment of common regional institutions, regulations and policies. Specifically, we distinguish between the scope of activities performed by subsidiaries, and the level of competence of those subsidiaries. The empirical analysis is based on a large-scale survey of foreign-owned units in Denmark, Finland and Norway. These Nordic countries differ with regard to their EU-membership status – Norway being the ‘outsider’, while the others are members – but are very similar to each other in most other respects. Our data show that subsidiaries in Norway report significantly lower scores for both scope of activities and levels of competence. The effects remain strong even when we are controlling for other potentially influential factors. The findings indicate that being on the ‘outside’ of the EU may indeed carry the price of becoming less attractive to MNE activity.
    Original languageEnglish
    JournalJournal of International Business Studies
    Volume34
    Issue number5
    Pages (from-to)443-456
    Number of pages13
    ISSN0047-2506
    DOIs
    Publication statusPublished - 2003

    Keywords

    • Subsidiary roles
    • Regional integration
    • Foreign direct investment
    • Nordic countries

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