Performance of foreign subsidiaries “in” and “from” Asia: A review, synthesis and research agenda

Abstract

The performance of foreign subsidiaries (FS) has been the topic of studies since the beginning of the international business field. However, research findings are contradictory because of the disparate foci of individual studies. In this review paper, we first identify key determinants of the performance of FS through a structured content analysis of 73 articles and 679 relationships since the year 2000. Second, we explain the effects of each determinant, and perform meta-analyses to determine which relationships are statistically meaningful. Third, we compare the effects of determinants across different combinations of home and host contexts, based on which, we provide possible explanations of previous inconsistent findings. We conclude by offering new theoretical directions to better understand determinants of the performance of FS. Keywords foreign subsidiaries, outward foreign direct investment, review, performance, Asia The growing trend of foreign direct investment (FDI) has been well recognized in recent decades. Within this trend, Asia, 1 a trillion US dollars, remains the largest FDI recipient region in the world, accounting for one third of global FDI TAD, 2016). Many foreign subsidiaries (FS) are established and operate in Asia, and FDI outflows from Asia have been sufficiently substantial to attract the attention of

A configurational perspective on subsidiary top management team national diversity and performance

“…However, in order to test our framework we draw on a sample of foreign-owned subsidiaries with headquarters in a greater number of home countries located in the two emerging economies of Taiwan and Thailand. The two countries are also of interest because emerging markets in general become increasingly relevant for an ever-growing number of MNEs from East and West (Tao et al, 2017;Liu et al, 2017;Bai et al, 2018).…”

“…While substantial progress has been made at the firm level (e.g. Masulis et al, 2012;Nielsen and Nielsen, 2013;Van Veen et al, 2014;Hooghiemstra et al, 2019), at the subsidiary level, the link between TMTD and performance is still ambiguous (Sekiguchi et al, 2011;Lakshman and Jiang, 2016;Tao et al, 2017;Bai et al, 2018). It is important to develop a better understanding of that issue because ill-fitting TMTD can lead to serious strategic consequences for the subsidiary as well as the MNE as a whole.…”

The role of subsidiary learning behavior and absorptive capacity in foreign subsidiary expansion

“…We controlled for a set of alternative explanations at different levels: parent, subsidiary, parent-subsidiary relationship, and country-level factors (Bai et al, 2018). First, we controlled for parent-level variables, because greater parental resources or capabilities may help subsidiaries expand their current business portfolio (Delios & Beamish, 2001;Kotabe, Srinivasan, & Aulakh, 2002).…”

“…Traditionally, the parent plays the role of a resource provider and decision maker, affecting subsidiary performance and survival (Delios & Beamish, 2001;Vahlne, Schweizer, & Johanson, 2012). For instance, parents transfer necessary resources and coordinate the exchange of managerial expertise that provides a competitive advantage to subsidiaries (Bai, Du, & Solarino, 2018;Wang, Tong, Chen, & Kim, 2009). Additionally, higher commitments from parents help subsidiaries exploit local opportunities, reducing the likelihood of divestment (Ambos, Anderson, & Birkinshaw, 2010).…”

“…Although there was much progress in uncovering the predictors of divestment such as parent, subsidiary or macroeconomic conditions (Bai et al, 2018;Markides, 1992), how the learning behaviors of subsidiaries can result in distinct divestment decisions has not been sufficiently examined in the literature. Therefore, drawing on organizational learning theory, we consider the relative importance of continuum of subsidiary learning behaviors and examine their effect in foreign expansion on subsidiary divestment.…”