Internal networks and sales performance of foreign subsidiaries: The moderating role of supportive industrial policy

Abstract

This study shows that greater investment by a parent company in its foreign subsidiaries improves subsidiary performance. Greater mutual dependence among foreign subsidiaries or affiliates has a positive effect on business performance. Business performance is greater when the parent company’s investment in its foreign subsidiaries is large and when the business run by the foreign subsidiary belongs to a growing industry in the target country. Business performance is higher still when foreign subsidiaries rely more on affiliates and when their business belongs to a growing industry in the target country.