How “Space” and “Place” Influence Subsidiary Host Country Political Embeddedness

Patricia Klopf, Phillip Christopher Nell

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    Abstract

    As a part of multinational corporations (MNCs), subsidiaries operate in distinct host countries and have to deal with their external context. Host country political embeddedness, in particular, helps subsidiaries to obtain knowledge and understanding of the regulatory and political context, and to get access to local networks. Moreover, they get some guidance and support from their headquarters. Distance between MNC home and host countries, however, alienates subsidiaries from the MNC and influences the extent of subsidiary host country political embeddedness. We suggest that the host country political and regulatory context moderates the effect of distance on subsidiary host country political embeddedness by reducing the need and/or value of headquarters support. Using a sample of 124 European manufacturing subsidiaries, we find that distance (space) and context (place) matter jointly: the impact of distance is stronger for subsidiaries that operate in host countries with low governance quality and low political stability in place.
    Original languageEnglish
    JournalInternational Business Review
    Volume27
    Issue number1
    Pages (from-to)186-197
    Number of pages12
    ISSN0969-5931
    DOIs
    Publication statusPublished - 2018

    Bibliographical note

    Epub ahead of print. Published online: 12. July 2017

    Keywords

    • Political embeddedness
    • MNC subsidiaries
    • Headquarters-subsidiary relationships
    • Institutional theory
    • Distance
    • Institutions

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