Factors leading to foreign subsidiary ownership: A multi-level perspective

Abstract

Entry strategy influences the success and survival of multinational enterprises (MNEs) in foreign market. Because foreign-market entry is a multilevel phenomenon, foreign ownership research could greatly benefit from studies using multilevel modeling and statistical analysis. Therefore, this research discusses these factors at the subsidiary level, the parent company level, and the dyad level between the subsidiary and its parent company. This research helps MNEs clarify the theoretical framework when deciding their ownership percentage in foreign investment. By using Hierarchical Linear Model (HLM) analysis and fsQCA (fuzzy-set Qualitative Comparative Analysis) to simultaneously consider 3-level factors, MNEs may reduce blind search costs, and gain enhanced understanding of various perspectives. The complementariness between the 2 parties, and the number and capabilities of subsidiaries affect the parent company's subsidiary-ownership decision, providing managerial insights for making optimal ownership decisions, and improving foreign investment performance.