Abstract
Abstract This paper provides a microeconometric analysis of the distinctive characteristics of springboard subsidiaries that have a positive impact on the subsidiaries’ performance. Based on panel data estimations for subsidiaries of European multinational companies with a presence in Spain, the authors found that if the subsidiary is located in the springboard country, then the performance improvement (increase in profit margin) of the subsidiary is about 49 percentage points. When the Spanish subsidiary is considered a springboard subsidiary, its performance is 7.7 percentage points higher than the performance of other subsidiaries that are not springboard subsidiaries. If the subsidiary has a technological relationship with another subsidiary, its performance is 6.7 percentage points higher than the performance of other subsidiaries that do not have a technological relationship. Finally, when the firm has low autonomy, the performance of the subsidiary is 6.2 percentage points lower than that of firms that are independent or have a high level of autonomy.
Highlights
Recent decades have witnessed significant changes in economics, politics, technology and culture; all of these changes have been bolstered by what is known today as globalization
When the subsidiary that is located in the springboard country is a springboard subsidiary, the effect on its performance increases by an additional 3.6% compared to subsidiaries that are not springboards (Table 3, row 6)
The findings here show that locating a subsidiary in a springboard country increases that subsidiary's performance by 18% compared to subsidiaries that are not located in a springboard country
Summary
Recent decades have witnessed significant changes in economics, politics, technology and culture; all of these changes have been bolstered by what is known today as globalization. Many academics from global institutions view this as a solely economic phenomenon: A strong interdependence develops among countries around the world (Stiglitz, 2006) in which their national or regional economies are immersed in a process of expanding integration (Whitley, 2001) aimed at stimulating the creation of and strengthening global institutions that advocate for adherence to international standards and behaviors (Benito, 2005) This phenomenon goes far beyond economic matters to encompass multiple dimensions, creating an environment in which business is carried out in a domestic context but in a global one as well. Globalization has changed this perception to one in which they are viewed as organizations in which linkages are prioritized over structure, flexibility over size, and frequently the intangible is valued more highly than what is physical assets (Pla and León, 2004)
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