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Business‐relatedness and strategy moderations: impacts on foreign subsidiary performance

Anders Pehrsson (School of Management and Economics, Linneaus University, Växjö, Sweden)

Journal of Strategy and Management

ISSN: 1755-425X

Article publication date: 18 May 2010




The purpose of this paper is to improve the existing knowledge of international strategy antecedents of foreign subsidiary performance.


Hypotheses are developed regarding the impact of perceived relatedness between the foreign subsidiary and the parent firm's core business unit, and the moderating effect of the subsidiary's business strategy. In order to test the hypotheses, the study uses survey data from Europe (Germany and the UK), and the USA, and the subsidiaries belong to Swedish manufacturing firms.


Perceived relatedness regarding intangible resources affects foreign subsidiary performance positively. Competitive differentiation and market knowledge of a foreign subsidiary reinforce the performance impact of the perceived relatedness.

Research limitations/implications

A foreign subsidiary's relatedness to the core business unit of its parent firm determines the subsidiary's ability to assimilate the parent firm's core competencies. The relatedness represents a synergy potential that is realized by the subsidiary's core competence exploitation and economies of learning.


The paper extends current knowledge of international strategy antecedents of foreign subsidiary performance as it applies the perceptual approach to relatedness and acknowledges the impact of foreign subsidiary strategy.



Pehrsson, A. (2010), "Business‐relatedness and strategy moderations: impacts on foreign subsidiary performance", Journal of Strategy and Management, Vol. 3 No. 2, pp. 110-133.



Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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