The effects of institutions and subsidiary competence on the international market orientation in foreign-owned subsidiaries

Abstract

Purpose– The purpose of this paper is to enhance our understanding on the effects of national and subnational institutions as well as subsidiary competences on the international market orientation in foreign-owned subsidiaries.Design/methodology/approach– A postal survey has been conducted based on a census-like database of foreign-owned subsidiaries in the Northwest of England.Findings– The findings show a positive relationship on the international market orientation for subsidiaries with extended competences and strong links to local suppliers, universities and competitors. A negative association has been found concerning formal institutional distance and strong links to local customers and government institutions.Research limitations/implications– The survey is limited to foreign-owned subsidiaries in the Northwest of England.Practical implications– This study implies that subsidiary managers need to take national and subnational institutions as well as subsidiary specific competences into consideration when looking for international market expansion.Originality/value– The originality of this paper lies in the detailed investigation of institutions at the national and subnational level as well as subsidiary competences on the international market orientation in foreign-owned subsidiaries.