Business group affiliation and foreign subsidiary performance

Castaldi, Sarah; Gubbi, Sathyajit; Kunst, Vincent E.; Beugelsdijk, Sjoerd

doi:10.1002/gsj.1357

Cited by 34 publications

(31 citation statements)

References 120 publications

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“…Traditionally, they arise primarily from shared technologies and brands. However, recent work on MNEs from emerging economies highlights different types of resources, such as capabilities to operate in environments of extensive institutional voids (Castaldi, Gubbi, Kunst, & Beugelsdijk, 2019;Del Sol & Kogan, 2007;Verbeke & Kano, 2015).…”

Section: Market Strategiesmentioning

confidence: 99%

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

2020

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Multinational enterprise (MNE) subsidiaries abroad are important organizations in their own rights. They typically hold some of the MNE's most critical resources, and operate at the forefront of complex international environments. In this review, we identify and organize theoretical and empirical research on subsidiary management based on over 600 articles in leading academic journals. We develop a conceptual framework that integrates complementary streams of theoretical and empirical research with the subsidiary as its focal unit of analysis. In particular, we review six lines of research on subsidiary scope, practices, knowledge management, engagement with local market and nonmarket actors, performance, and individuals within subsidiaries. We highlight theoretical perspectives that have contributed to, and been advanced by, research on MNE subsidiaries. Based on the review, we explore future research agendas, linking the contemporary research themes with two main thrusts. First, subsidiary management is a multi-level phenomenon that would benefit from more microfoundational research. Second, subsidiary management operates at key interfaces of technology paradigm shifts, and of disruptions in the political and institutional environment. Research into the dynamics of subsidiary management would thus enhance our understanding of international business in a volatile global economy. Journal of International Business Studies (2020) 51, 538-576.

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Section: Market Strategiesmentioning

confidence: 99%

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

2020

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“…Business groups in emerging markets are one example of such “loose coupling” of subsidiaries in a network structure. The paper by Castaldi, Gubbi, Kunst and Beugelsdjik () in this issue explores the advantages of the business group affiliation of Indian firms. They find that affiliated firms perform better than independent firms and this also goes for the foreign subsidiaries of business group members.…”

Section: Subsidiary Power In Multinationalsmentioning

confidence: 99%

Subsidiary power: Loaned or owned? The lenses of agency theory and resource dependence theory

Cuervo-Cazurra

Mudambi

Pedersen

2019

Global Strategy Journal

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Research Summary We analyze power relationships in subsidiaries of multinational corporations. We explain how despite many advances in the literature, there is still an unresolved debate with respect to the critical question of whether subsidiary power is loaned or owned. We develop an overarching framework that encompasses both agency theory and resource dependence theory as the two pillars to understand decision‐making by managers in subsidiaries. We propose that agency theory applies more when the subsidiary's decision rights are “loaned” by headquarters, while resource dependence theory applies more when the subsidiary “owns” its decision rights. We also explain how subsidiary evolution integrates the arguments of these two theories. Agency appears to apply earlier while resource dependence is more relevant at later stages. Managerial Summary We provide a framework that helps address the challenges of managing power relationships in subsidiaries of multinational firms. Traditionally, studies have proposed to explain these relationships using either agency theory and the idea that subsidiary managers need to be controlled by headquarters or resource dependence and the idea that subsidiary managers can chart their own path. We solve this conflict by proposing that agency theory applies when the subsidiary's decision rights are “loaned” by headquarters, while resource dependence theory applies when the subsidiary “owns” its decision rights. We also explain how the analysis of subsidiary evolution integrates the arguments of these two theories as agency seems to apply earlier in the evolution of the subsidiary while resource dependence seems to apply at a later stage.

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“…B.G AFs have more tendency to finance their investments rather than NAFs (Jindal and Seth, NA). BG affiliation positively influences the ROA (Castaldi et al, 2019). B.G AFs have the highest ROA and Tobin's Q than NAFs (Ahmad et al, 2018).…”

Section: Literature Reviewmentioning

confidence: 92%

The Role of Financial Constraints in Business Environment; Evidence from Business Group Affiliated and Non-Affiliated Firms in Pakistan

Aslam¹,

Sohail²

2021

JBR

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The main purpose of this study is to investigate the relationship between Cash Flows, Growth Opportunities, Firm Size, Firm Age, Firm Performance, Investment, Financial constraints and Leverage between the B.G AFs and NAFs of Pakistan. Current study consists of the balanced panel data containing 86 B.G AFs vs. 90 NAFs of the Pakistan. This study covers the yearly data period from 2007 to 2017. The findings showed that the cash flows are positively correlated with the return on assets, investments, financial constraints, while leverage is negatively correlated with the financial constraints. The positive correlation between cash flows and return on asset is higher for the B.G AFs, which means the B.G AFs are more profitable than the NAFs. The correlation of cash flows with the investment and financial constraints is positive but lower for the B.G AFs, showing that AFs investment is less sensitive and less financially constrained than NAFs. The inverse correlation between leverage and financial constraints shows that the B.G AFs have easy access to the financial sources. The positive and higher correlation of growth opportunities with cash flows and return on assets shows that the AFs growth is higher than NAFs.

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Business group affiliation and foreign subsidiary performance

Cited by 34 publications

References 120 publications

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

Subsidiary power: Loaned or owned? The lenses of agency theory and resource dependence theory

The Role of Financial Constraints in Business Environment; Evidence from Business Group Affiliated and Non-Affiliated Firms in Pakistan

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