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Determinants of international subsidiaries’ performances

Determinants of international subsidiaries’ performances One important strategy Multinational Enterprises (MNEs) employ to compete in the global market is to engage in foreign investment, but firms must know how they can perform better in the host country market. International subsidiaries’ performances play a chief role for MNEs’ globalization strategy. The purpose of this paper is to construct multi-level research with parent-level data at the higher level and subsidiary-level data at the lower level.Design/methodology/approachThis study helps capture the rapid growing trend in emerging markets and uses a sample of Taiwanese enterprises and their subsidiaries in China. The data come from the Taiwan Economic Journal database. Precisely, the authors obtain 711 Taiwanese MNEs and 4,458 of their subsidiaries in China.FindingsThis study finds among the parent company’s attributes that firm size, firm total performance, depth of internationalization and foreign shareholding have significant impacts on subsidiary performance, while within the subsidiary’s attributes, subsidiary size, subsidiary-owned capital and total investment fund significantly affect subsidiary performance.Originality/valueIn order to capture subsidiary performance, this study uses a multi-level analysis approach with the Hierarchical Linear Model statistic method to separate parent company attributes and subsidiary-owned attributes as two distinct levels. This method fills the gap in the literature by analyzing subsidiary performance and clarifying that foreign direct investment is a multi-level phenomenon that cannot be analyzed using a one-level analysis method. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Emerging Markets Emerald Publishing

Determinants of international subsidiaries’ performances

International Journal of Emerging Markets , Volume 15 (4): 21 – Apr 24, 2020

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References (103)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1746-8809
DOI
10.1108/ijoem-06-2019-0445
Publisher site
See Article on Publisher Site

Abstract

One important strategy Multinational Enterprises (MNEs) employ to compete in the global market is to engage in foreign investment, but firms must know how they can perform better in the host country market. International subsidiaries’ performances play a chief role for MNEs’ globalization strategy. The purpose of this paper is to construct multi-level research with parent-level data at the higher level and subsidiary-level data at the lower level.Design/methodology/approachThis study helps capture the rapid growing trend in emerging markets and uses a sample of Taiwanese enterprises and their subsidiaries in China. The data come from the Taiwan Economic Journal database. Precisely, the authors obtain 711 Taiwanese MNEs and 4,458 of their subsidiaries in China.FindingsThis study finds among the parent company’s attributes that firm size, firm total performance, depth of internationalization and foreign shareholding have significant impacts on subsidiary performance, while within the subsidiary’s attributes, subsidiary size, subsidiary-owned capital and total investment fund significantly affect subsidiary performance.Originality/valueIn order to capture subsidiary performance, this study uses a multi-level analysis approach with the Hierarchical Linear Model statistic method to separate parent company attributes and subsidiary-owned attributes as two distinct levels. This method fills the gap in the literature by analyzing subsidiary performance and clarifying that foreign direct investment is a multi-level phenomenon that cannot be analyzed using a one-level analysis method.

Journal

International Journal of Emerging MarketsEmerald Publishing

Published: Apr 24, 2020

Keywords: Emerging markets; Multi-level analysis; Hierarchical Linear Model; International subsidiary performance; Parent company level; Subsidiary level

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