Search results

1 – 10 of over 12000
To view the access options for this content please click here
Book part
Publication date: 8 November 2010

Ji Wu, Bang Nam Jeon and Alina C. Luca

This chapter examines whether the geographic distance between subsidiaries of multinational banks and their headquarters is an important factor in determining the…

Abstract

This chapter examines whether the geographic distance between subsidiaries of multinational banks and their headquarters is an important factor in determining the performance of the subsidiaries. Using various performance indicators of 340 subsidiaries in 54 emerging and developing economies from 69 global banks during the years 1994–2008, we find evidence that first, the distance constraint adversely affects loan growth, profitability, and performance of foreign bank subsidiaries, and second, the unfavorable information asymmetry faced by foreign banks, due to the distance constraint, in financing foreign clients cannot be fully overcome by establishing their presence abroad such as setting up their foreign subsidiaries. We further examine if the effect of distance is symmetric across different banks and countries and find the following various economic, financial, and institutional factors to affect the strength of distance constraints in the multinational banking activities: the entry mode of foreign banks, the history of presence in local markets, the existence of credit information institutions, the cultural similarity between the home and host markets, financial depth, financial crisis periods, the stock market development, the banking market structure in host markets, and the hierarchy of the subsidiary in the multinational banking conglomerate.

Details

International Banking in the New Era: Post-Crisis Challenges and Opportunities
Type: Book
ISBN: 978-1-84950-913-8

To view the access options for this content please click here
Book part
Publication date: 30 December 2004

Shigeru Asaba and Hideki Yamawaki

This study examines the determinants of performance of foreign manufacturing subsidiaries in Japan. The study finds that a foreign parent’s size, the subsidiary’s age, and…

Abstract

This study examines the determinants of performance of foreign manufacturing subsidiaries in Japan. The study finds that a foreign parent’s size, the subsidiary’s age, and a complicated distribution system influence a subsidiary’s performance. There was little significant change in these determinants over a 20-year period. However, for subsidiaries that survived over the observation period of this study, some determinants changed. We also found that by forming joint ventures with Japanese firms, foreign firms can overcome the obstacle of distribution and circumvent the disadvantage of inexperience. Moreover, the mitigating effects of joint ventures vary, depending on the type of Japanese partner.

Details

Japanese Firms in Transition: Responding to the Globalization Challenge
Type: Book
ISBN: 978-0-76231-157-6

To view the access options for this content please click here
Article
Publication date: 17 May 2013

Naoki Ando and Nobuaki Endo

The purpose of this paper is to examine how service firms determine foreign subsidiary staffing, emphasizing the joint effect of an attribute specific to the service…

Abstract

Purpose

The purpose of this paper is to examine how service firms determine foreign subsidiary staffing, emphasizing the joint effect of an attribute specific to the service sector and the institutional environment of the host countries.

Design/methodology/approach

This study develops hypotheses regarding the joint effect of human capital intensity and institutional distance on the ratio of parent country nationals to foreign subsidiary employees. A Tobit regression is conducted to test the hypotheses, using a sample that consists of 1,067 foreign subsidiaries of Japanese service firms.

Findings

This study finds that the human capital intensity of a service firm has a positive impact on the ratio of parent country nationals to foreign subsidiary employees. The study also finds that the institutional distance between the host country and the home country is negatively associated with the ratio of parent country nationals. In addition, this study finds that the positive impact of human capital intensity on the ratio of parent country nationals becomes weaker as the institutional distance becomes greater.

Originality/value

This study explores the factors that affect the decisions regarding foreign subsidiary staffing in the service sector. It advances the understanding of the foreign subsidiary staffing of service firms by examining the joint effect of an attribute specific to the service sector and the institutional environment of the host countries. This study shows evidence that the effect of an attribute specific to the service sector is more complex than a linear relationship.

To view the access options for this content please click here
Article
Publication date: 3 June 2014

Naoki Ando and Yongsun Paik

The purpose of this paper is to examine the relationship between foreign subsidiary staffing and subsidiary performance by focussing on two staffing practices: first, the…

Abstract

Purpose

The purpose of this paper is to examine the relationship between foreign subsidiary staffing and subsidiary performance by focussing on two staffing practices: first, the ratio of parent country nationals (PCNs) to foreign subsidiary employees and second, the number of PCNs assigned to the foreign subsidiary.

Design/methodology/approach

Hypotheses predicting curvilinear relationships between the assignment of PCNs and subsidiary performance are tested using a panel data set consisting of 4,858 foreign subsidiaries of Japanese multinational corporations (MNCs).

Findings

The results demonstrate that the two staffing practices have different effects on subsidiary performance. The ratio of PCNs to foreign subsidiary employees has an inverted U-shaped relationship with subsidiary performance, while the number of PCNs assigned to the subsidiary has a linear and negative effect on subsidiary performance.

Research limitations/implications

The results of this study are subject to limitations. First, the sample used in this study consists solely of the foreign subsidiaries of Japanese firms. This research design limits the generalizability of the findings of this study. Second, other decisions related to subsidiary staffing such as the ratio of PCNs in the subsidiary's top management team need to be examined to advance understandings of the relationship between subsidiary staffing and subsidiary performance.

Practical implications

MNCs need to identify the appropriate number of PCNs at which they can achieve the optimal trade-off with the PCN ratio to enhance the competitiveness and the performance of a foreign subsidiary. In doing so, they need to take into consideration that an increase in the number of PCNs has an immediate negative effect on the workplace morale of host country nationals.

Originality/value

This study incorporates two staffing practices into its analyses and shows that they have different implications for subsidiary performance. The results suggest that focussing on one staffing practice alone limits understanding of the complex relationship between foreign subsidiary staffing and subsidiary performance.

Details

Journal of Global Mobility, vol. 2 no. 1
Type: Research Article
ISSN: 2049-8799

Keywords

To view the access options for this content please click here
Book part
Publication date: 24 October 2013

Franklin Allen, Xian Gu and Oskar Kowalewski

In this chapter we study the intra-group transactions between the parent bank and its foreign subsidiaries in European Union (EU) countries during the crisis. We use…

Abstract

In this chapter we study the intra-group transactions between the parent bank and its foreign subsidiaries in European Union (EU) countries during the crisis. We use hand-collected data from annual statements on related party transaction and find that they may create a serious problem for the stability of the foreign banks’ subsidiaries. Moreover, as some of those subsidiary banks were large by assets in some of the member states the related party transactions with the parent bank created a serious threat to the host countries’ financial system stability. We attribute this transaction to the weak governance in foreign subsidiaries. We suggest improvements in governance as well as greater disclosure of related party transactions in bank holding companies in Europe.

Details

Global Banking, Financial Markets and Crises
Type: Book
ISBN: 978-1-78350-170-0

Keywords

To view the access options for this content please click here
Article
Publication date: 29 May 2020

George O. White III, Thomas A. Hemphill, Tazeeb Rajwani and Jean J. Boddewyn

The purpose of this study is to apply the institution-based view and resource dependence theory in arguing that perceived deficiencies in a legal service sector where a…

Abstract

Purpose

The purpose of this study is to apply the institution-based view and resource dependence theory in arguing that perceived deficiencies in a legal service sector where a foreign subsidiary operates will influence the intensity of its political ties with actors in both the regulatory and legal arenas. The authors further theorized that these relationships will vary across governance environments.

Design/methodology/approach

The research context for this study was multinational enterprises (MNE) wholly owned foreign subsidiaries and international joint ventures (IJVs) operating in the Philippines and Thailand. Data for most variables in this study came from primary survey data collected in 2018 from senior managers of MNE WOSs and IJVs operating in the Philippines and Thailand.

Findings

The authors’ analysis of 352 foreign subsidiaries operating in the Philippines and Thailand show that, in a flawed democracy, perceived deficient legal services enhance the intensity of foreign subsidiary political ties with government actors in both the regulatory and legal arena. However, in a hybrid regime, perceived deficient legal services enhance only the intensity of foreign subsidiary political ties with government actors in the regulatory arena. The authors’ findings also suggest that the relationship between perceived deficiencies in legal service sector and the intensity of political ties is stronger for foreign subsidiaries that operate in heavily regulated industries across both a flawed democracy and hybrid regime. Conversely, the authors do not find the market orientation of these foreign subsidiaries to play a role in this process.

Research limitations/implications

The authors’ study was unable to control for whether managerial perceptions of deficient legal services were well informed at the local or federal level. This issue raises the question of will the presence of an in-house legal department influence managerial perceptions with regard to deficiencies within a legal service sector? Based on these limitations, the authors suggest that future research can further extend political ties research by using a fine-grained analysis in investigating the antecedents of managerial perceptions of legal services within different legal jurisdictions.

Originality/value

The political ties literature has largely argued that political ties are more prevalent in environmental contexts comprising institutional voids as MNEs attempt to mitigate volatility associated with the lack of developed institutional infrastructure (e.g. Blumentritt & Nigh, 2002; Bucheli et al., 2018). However, the concept of institutional voids is very broad and still rather abstract in nature. Hence, scholars have yet to fully understand what types of institutional voids may drive MNE foreign subsidiary political tie intensity in varying governance contextsThe authors’ study attempts to contribute to this important line of research by investigating how one type of institutional void, namely, perceived deficiencies in the legal service sector, can influence the intensity of political ties in varying governance environments.

Details

Multinational Business Review, vol. 28 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

To view the access options for this content please click here
Article
Publication date: 13 May 2014

Anders Pehrsson

There is a lack of research on how the industrial firm's international strategy is associated with basic and advanced value-adding modes of the wholly owned foreign

Abstract

Purpose

There is a lack of research on how the industrial firm's international strategy is associated with basic and advanced value-adding modes of the wholly owned foreign subsidiary. The purpose of this paper is to fill the gap by answering two questions: how are relatedness between the firm and the foreign subsidiary, and the firm's international scope associated with foreign subsidiary's value-adding mode? How does the subsidiary's market experience moderate the relationships?

Design/methodology/approach

The study develops a conceptual model that integrates strategy theory and internationalization theory in order to explain basic value-adding modes (promotion, sales, and after-sales services), and advanced modes that also include product development and/or production. Also, the study tests the model using statistical data from subsidiaries of Swedish firms operating in Germany, the USA, and the UK.

Findings

It was found that greater relatedness between the core business unit of the parent firm and the foreign subsidiary favors a basic mode. However, the foreign subsidiary's market experience weakens the relationship, and the interaction triggers an advanced mode. Also, greater international scope of the firm favors an advanced mode.

Research limitations/implications

The model test shows that research needs to consider both international strategy and market experience in explaining value-adding modes of an industrial firm's wholly owned subsidiary.

Practical implications

By using the study contributions the industrial firm's efforts to efficiently implement international strategy would become more efficient as strategy coherence will increase.

Originality/value

This paper contributes to literature on international strategy and internationalization by showing that international strategy and market experience of foreign markets mutually impact value-adding modes of wholly owned foreign subsidiaries.

Details

Journal of Strategy and Management, vol. 7 no. 2
Type: Research Article
ISSN: 1755-425X

Keywords

To view the access options for this content please click here
Article
Publication date: 19 November 2008

Roger (Rongxin) Chen

This study examines the impact of MNC parents on the cost of doing business abroad (CDBA) of their foreign subsidiaries in emerging markets. Based on a case research, we…

Abstract

This study examines the impact of MNC parents on the cost of doing business abroad (CDBA) of their foreign subsidiaries in emerging markets. Based on a case research, we found that MNC HQs can influence the activity‐based CDBA of their foreign subsidiaries through policies on technology royalties, expatriate expenses, and through helping the export business of their subsidiaries. Theoretical implications of these findings are discussed.

Details

Multinational Business Review, vol. 16 no. 3
Type: Research Article
ISSN: 1525-383X

Keywords

To view the access options for this content please click here
Article
Publication date: 27 April 2010

Yung‐Chul Kwon

The study of the market orientation of MNC subsidiaries in foreign markets has been generally limited. This paper, therefore, aims to assess the effects of market…

Downloads
2208

Abstract

Purpose

The study of the market orientation of MNC subsidiaries in foreign markets has been generally limited. This paper, therefore, aims to assess the effects of market orientation on performance and the factors affecting the utilization of market orientation by foreign subsidiaries.

Design/methodology/approach

Market orientation is operationalized within the context of the foreign market. Research hypotheses are tested using a sample of 168 Korean MNC subsidiaries operating in China and India, the two most giant emerging countries in the world.

Findings

The results show that market orientation performs an important function in foreign subsidiary performance. In addition, foreign subsidiaries, which possess superior technology advantages and maintain active network relationships with local key entities such as suppliers, distributors, customers, and governmental authorities, are shown to actively devote themselves to market orientation.

Originality/value

As this study is to address the influence of MNC subsidiaries' market orientation on their business performance in the emerging markets, the results are expected to make a contribution to the literature in the field of market orientation.

Details

International Marketing Review, vol. 27 no. 2
Type: Research Article
ISSN: 0265-1335

Keywords

To view the access options for this content please click here
Article
Publication date: 11 March 2009

Eugene Kang and Dan Li

We contend that the international strategy adopted by and the international experience of top executives in parent firms, as well as the embeddedness of foreign

Abstract

We contend that the international strategy adopted by and the international experience of top executives in parent firms, as well as the embeddedness of foreign subsidiaries in host countries, moderate the impact of institutional distance between home and host countries on the divergence of isomorphic pressures experienced by foreign subsidiary managers. We further suggest that diverging isomorphic pressures are more likely to spur foreign subsidiary managers to deinstitutionalize organizational routines from parent firms when these managers possess knowledge‐based power, the subsidiary’s performance is declining, or social controls are lacking from the parent firm. Implications for research and practice are discussed.

Details

Multinational Business Review, vol. 17 no. 1
Type: Research Article
ISSN: 1525-383X

Keywords

1 – 10 of over 12000