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

Business‐relatedness and strategy moderations: impacts on foreign subsidiary performance Purpose – The purpose of this paper is to improve the existing knowledge of international strategy antecedents of foreign subsidiary performance. Design/methodology/approach – 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. Findings – 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. Originality/value – 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Strategy and Management Emerald Publishing

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

Journal of Strategy and Management , Volume 3 (2): 24 – May 18, 2010

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References (94)

Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
1755-425X
DOI
10.1108/17554251011041779
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to improve the existing knowledge of international strategy antecedents of foreign subsidiary performance. Design/methodology/approach – 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. Findings – 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. Originality/value – 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.

Journal

Journal of Strategy and ManagementEmerald Publishing

Published: May 18, 2010

Keywords: Diversification; Corporate strategy; Performance management; Subsidiaries; Multinational companies

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