Re-examining foreign subsidiary survival in a transition economy: Impact of market identity overlap and conflict

Abstract

Taking an identity perspective from the organizational ecology literature, we re-examine foreign subsidiary survival in a transition economy. State-owned enterprises (SOEs) with a socialist identity and privately owned enterprises (POEs) with a market identity exert different influences on foreign-owned enterprises (FOEs). SOEs and POEs affect the survival of FOEs primarily through the cognitive legitimation process. SOEs tend to crowd out FOEs due to identity conflict. Owing to identity overlap, POEs tend to increase the survival chances of FOEs. The level of socialist legacy in regions where FOEs are located affects the sociopolitical legitimacy of FOEs’ market identity, thus moderating the relationships between SOE and POE density and the survival of foreign subsidiaries.