One important issue international firms must face involves the evaluation and control of credit risk. Many studies dealing with international credit management have focused on the practices used by multinational enterprises. In this study we take a different approach to this topic by analyzing the credit management decisions made by 188 U.S. foreign subsidiaries. We examine many aspects of the foreign subsidiary manager's credit policies including credit standards, credit terms, collection efforts and customer creditworthiness. The results of this study indicate that credit management practices of foreign subsidiaries are similar to those used by parent companies. In addition, the findings show that foreign managers generally use theoretically‐preferred methods when making credit decisions.
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