From Here to There: Home Country Alliance Experience and Foreign Subsidiary Survival

Abstract

Ample research has examined the difficulties associated with early internationalization and how they can be remedied with experience expanding abroad. We examine a complementary question: Whether and under what conditions a firm can prepare for international expansion via collaborative relationships in its home country, i.e. how domestic experience with foreign strategic alliance partners matters. Recent studies have started to investigate the relation between inward and outward foreign direct investment and ways in which emerging economy firms, particularly, can learn from foreign partners. We develop knowledge-based theory about the shape and contingencies of the relationship between a firm’s experience collaborating with foreign partners in its home country, and the firm’s subsequent international expansion performance (subsidiary survival). Empirical analyses using firm-level data on foreign direct investment into and out of China validate several novel predictions and add interesting contrast to some more standard ones. We further inform some predictions and findings based on fieldwork. We thus elucidate theoretically and empirically the ways and circumstances under which domestic strategic alliance experience with foreign multinationals can increase foreign venture success.