Abstract
This paper demonstrates that better governed foreign subsidiaries of multinational enterprises (MNEs) have higher survival likelihood than their less effectively governed counterparts. It also explains, using agency theory and prospect theory, how and why the use of subsidiary-level and parent-level foreign subsidiary governance mechanisms increases foreign subsidiary survival likelihood. We draw upon archival and interview data on the mechanisms that Japanese MNEs use to govern their Canadian subsidiaries and use mixed-methods to analyze these data. Research and practical implications are discussed.
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