When Do Distance Effects Become Empirically Observable? An Investigation in the Context of Headquarters Value Creation for Subsidiaries

Sjoerd Beugelsdijk*, Phillip C. Nell, Björn Ambos

*Corresponding author for this work

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    Abstract

    Integrating distance research with the behavioral strategy literature on MNC headquarters-subsidiary relations, this paper explores how the distance between headquarters and subsidiaries relates to value added by the headquarters. We show for 124 manufacturing subsidiaries in Europe that, on average, distance is unrelated to value added by headquarters but that this effect is contingent upon the extent to which the subsidiary is locally embedded. Only after a certain threshold level of subsidiary embeddedness, distance is negatively related to headquarters value added. This effect is more pronounced for cultural, economic, and administrative distances than for pure geographic distance, highlighting the critical role of contextual variation for MNCs.
    Original languageEnglish
    JournalJournal of International Management
    Volume23
    Issue number3
    Pages (from-to)255-267
    Number of pages13
    ISSN1075-4253
    DOIs
    Publication statusPublished - Sep 2017

    Bibliographical note

    Published online: 3. April 2017

    Keywords

    • Multinational corporations
    • Distance
    • Headquarters-subsidiary relationships
    • Headquarters value added
    • Subsidiary embeddedness
    • Behavioral approach

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