How do MNEs React to Economic Crisis and What Factors Matter for Subsidiary Growth? (WITHDRAWN)

Abstract

This paper examines the responses of MNEs’ subsidiaries during the Asian financial crisis and the Global financial crisis. Specifically, it looks at the effects of ownership structure, number of expatriates and investment motive of subsidiaries on their growth during the early period of the crises. The main findings are that: (a) foreign parent’s ownership helps a subsidiary in regional/local crises, whereas local ownership in global crises; (b) subsidiaries with no prior exposure to crisis tend to rely on expatriate managers and local ownership for growth during this period; and (c) efficiency- seeking investments grow the most during early regional/local crises; whereas market-seeking subsidiaries fare better in global crisis. Our research suggests that the multinationality of the foreign parent firm can help subsidiaries when they are impacted by local crises, whereas the local partner can provide better resilience to the subsidiaries during early times of global crises.