Rapid institutional changes and subsidiary performance: the impact of home and host country learning

Abstract

This research focuses on the role played by home and host country learning in the relationship between the speed of institutional change and subsidiary performance. We posit a negative relationship between the speed of pro-market institutional change in the host country and subsidiary performance. We also argue that this relationship is contingent to the institutional learning that parent multinationals (MNEs) have previously obtained in other countries. By integrating the dynamic institution-based view and the organizational learning literatures, our analysis highlights the key role that the abilities and skills developed by MNEs to face rapid institutional changes has on the host countries where they operate. We test our theoretical model using a sample of 348 subsidiaries from 70 MNEs that operate both in emerging and developed economies for the period 2001-2017.