Dissecting the sources of competitive advantage of infant MNEs: performance antecedents of foreign affiliates of Polish firms

Abstract

This paper draws from the resource-based view, organisational learning perspective and institution-based view of international business to explore the effects of firm capabilities and international experience on the performance of foreign affiliates of infant MNEs. In doing so, it aims to contribute to the debate on the competitive advantage of firms from less advanced economies which have only recently joined international business transactions. Moreover, the analysis includes the moderating effect of institutional differences, i.e. both more and less institutionally advanced host countries. The analysis reveals that managerial capabilities are more relevant to success in more advanced economies than in less advanced ones where non-market strategies are frequently the source of advantage of infant MNEs. Moreover, in more advanced markets overall FDI experience is essential to successfully starting up operations, to a larger extent than in less developed countries. An opposite effect can be observed for prior experience with similar countries.