Proximity at a distance: The relationship between foreign subsidiary co-location and MNC headquarters board interlock formation

Beule, Filip De; Elia, Stefano; Garcia‐Bernardo, Javier; Heemskerk, Eelke M.; Jaklič, Andreja; Takes, Frank W.; Zdziarski, Michał

doi:10.1016/j.ibusrev.2021.101971

Cited by 7 publications

(6 citation statements)

References 133 publications

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“…In recent years, some ESG studies have been conducted to examine the impact of developing ESG on financial performance, but their findings are even more controversial. While some studies obtain negative or neutral results, most studies reveal a positive impact [5][6][7] At the same time, given that ESG is a theory that has spread globally and serves as an important way for firms to gain legitimacy overseas, it is essential to explore the impact of ESG on corporate profitability in an international market environment. China is the world's largest exporter of goods and one of the world's largest importers of goods [8].…”

Section: Introductionmentioning

confidence: 99%

“…Unlike external factors, such as policy changes, population movements and legal environments, cultural distance arising from differences in language, customs and values is stable, persistent and difficult to reconcile. Especially in multinational operations, cultural distance has a more significant impact, and a large cultural distance between the parent company and the host country could result in a hindrance to business operations [6,7]. In this study, cultural distance is defined as the degree of difference between countries in the norms and values they share [14].…”

Section: Introductionmentioning

confidence: 99%

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ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals

Liu

2023

Sustainability

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In recent years, the demand for social responsibility arising from sustainable development has led to the gradual formation of a global consensus on the concept of environmental, social and governance (ESG), which has a wide impact on corporate operations. Based on legitimacy theory, this study examines the impact of ESG on corporate profitability. In addition, it explores the effectiveness of cultural distance as a moderator in the relationship between ESG and corporate profitability. Using fixed effects and moderated effects models, this study analyses panel data of Chinese manufacturing multinationals from 2014 to 2021. The results show that ESG significantly and positively affects corporate profitability and that the impact of ESG on corporate profitability is significantly and positively moderated by cultural distance. The research results are expected to provide meaningful insights into the importance of ESG and the factors to be considered by firms in their cross-border investment decision making.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals

Liu

2023

Sustainability

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“…I argued that where the subsidiary is managed under complex structures, they are better able to develop useful resources, which can be transferred to the MNE, whereas such options may be limited to subsidiaries managed under a simple parent-child structure. Hence, being near to the HQ (De Beule et al ., 2022; Tippmann et al ., 2012), and being less competent compared to subsidiaries managed under complex structures, the initiatives of subsidiaries managed under simpler structures get more attention and as a result more resource support. With that this study makes a key contribution to the literature by linking organizational structures to corporate entrepreneurship uncovering a key important contingency to MNE-subsidiary collaboration on initiatives.…”

Section: Discussion Implications and Limitationsmentioning

confidence: 99%

“…Furthermore, since, subsidiaries managed through simpler organizational structures involve fewer dyadic relationships between the subsidiary and the MNE HQ -from a proximity perspective (De Beule et al, 2022;Tippmann et al, 2012), such subsidiaries are nearer and arguably more visible to the MNE HQ. From a paradox perspective, again, while generally such subsidiaries may also seek to maintain autonomy, owing to lesser competence and opportunities for networking, however, the subsidiaries may have higher needs for MNE resources for their entrepreneurial initiatives.…”

Section: Subsidiary Autonomy Organizational Structures and Mne Resour...mentioning

confidence: 99%

“…However, while subsidiaries managed under complex structures are evolved and have developed networks and may possibly have bargaining power in the MNE, they may less likely receive MNE resource support for the initiatives either because of the HQ high expectations from them (being self-sufficient) to rely on their own network or that the subsidiaries per se would avoid MNE resource support as they may perceive MNE involvement as a tradeoff for their autonomy regarding initiative. Hence, from a proximity perspective (De Beule et al ., 2022; Tippmann et al ., 2012), the subsidiaries managed under simpler (parent–child) structures are nearer and arguably more visible to the MNE HQ and may get higher resource support for their initiatives compared to the subsidiaries managed under complex structures.…”

Section: Introductionmentioning

confidence: 99%

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A paradoxical perspective on subsidiary autonomy and MNE entrepreneurial initiative support: uncovering the role of organizational complexity and external embeddedness

Raziq

2023

CCSM

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PurposeThis study examines the relationship between subsidiary autonomy and the MNE subsidiary initiative collaboration (i.e. entrepreneurial initiative resource support, the subsidiary seeks and receives from the MNE). It proposes some underlying mechanisms as external embeddedness, and MNE organizational structures to explain the relationship between subsidiary autonomy and the MNE subsidiary initiative collaboration. The study draws on paradox theory arguing how at both the subsidiary and the parent MNE levels certain paradoxes are handled.Design/methodology/approachSurvey data are collected in a time-lagged fashion from 429 foreign subsidiaries in New Zealand. Data are analyzed using structural equation modeling.FindingsResults show that the relationship between subsidiary autonomy and the receipt of MNE resource support for initiatives is positive, and this is more likely the case where the subsidiary is managed under simple structures (i.e. subsidiary reports to corporate headquarters, regional headquarters or mandated units) rather than complex structures (i.e. a matrix or a network). Furthermore, an increase in subsidiary autonomy positively influences MNE initiative resource-seeking, and this is more likely the case where the subsidiary is less embedded externally.Originality/valueThe study is one of the first of studies that has applied paradox theory to MNE–subsidiary relationships regarding autonomy and MNE collaboration on initiatives. The study extends research on MNE–subsidiary collaboration on subsidiary initiatives as existing research is limited on this domain. The study contributes by showing how external embeddedness, and the complexity of organizational structures determine the relationship between subsidiary autonomy and MNE subsidiary initiative collaboration.

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Corporate network formation in Kuwait: board interlocks network analysis using exponential random graph models

Alebrahim,

Alnahedh

2024

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Purpose Interlocking directorates are a common phenomenon across several markets around the world. Yet, the institutional environment and the role of corporate elites in forming board networks promote some developing markets as a unique setting to understand the corporate boards network structure. This study aims to first explore the board directors’ network of all publicly listed companies in Kuwait. This paper then evaluates the effects of exogenous factors and endogenous network structural processes on the likelihood of board interlock. Design/methodology/approach This study analyzes the interlocks network structures of 167 listed companies in 13 different market sectors in Kuwait relying on hand-collected directors’ data and using four measures of network centrality: betweenness, degree, closeness and eigenvector. The authors predict board interlocks using exponential random graph models (ERGM) and firm-level information from the Bloomberg database. Findings This study observes that both the firms and directors’ networks consist of 55 components, with the largest component containing about half of the total number of firms/directors. The firm’s network consists of one giant component of 85 firms, including all but one bank. This study shows the importance of endogenous network variables, such as the number of edges, centralization and triangles on the estimation of the factors that promote the board interlocks. Highly centralized firms are less likely to interlock with other firms, while two firms that are interlocked with a common third firm are more likely to interlock. Originality/value This paper is the first to analyze in-depth the structure of the directors network of companies in Kuwait. This study illustrates the complex map of interfirm and directors social networks in Kuwait. To the best of the authors’ knowledge, this study is among the first to exploit ERGM in the context of board interlocks to account for potential cross-dependencies and emergent network structures. Managers can identify the director interlock with other firms in the network and take advantage of the connection as a source of external knowledge and influence.

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Proximity at a distance: The relationship between foreign subsidiary co-location and MNC headquarters board interlock formation

Cited by 7 publications

References 133 publications

ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals

ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals

A paradoxical perspective on subsidiary autonomy and MNE entrepreneurial initiative support: uncovering the role of organizational complexity and external embeddedness

Corporate network formation in Kuwait: board interlocks network analysis using exponential random graph models

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