The impact of organizational stigmatization on the operational risk and performance of overseas subsidiaries: empirical evidence from Chinese multinational enterprises

Abstract

This study used the global database of events, language, and tone of international public opinion big data to measure organizational stigmatization against China. It then used an econometric model to investigate the impact of organizational stigmatization on the operational risk and performance of overseas subsidiaries of Chinese multinational enterprises. The results show that: (1) organizational stigmatization increases overseas subsidiaries’ operational risk and reduces their operational performance, which is more evident in overseas subsidiaries of state-owned enterprises; (2) the host country’s political stability weakens the organizational stigmatization’s positive impact on overseas subsidiaries’ operational risk. The geographical distance between the home and host countries strengthens organizational stigmatization’s positive impact on overseas subsidiaries’ operational risk; (3) the host country’s political stability and the geographical distance between the home and host countries have no moderating effect on organizational stigmatization and overseas subsidiaries’ operational performance; and (4) organizational stigmatization by the host country reduces overseas subsidiaries’ operational performance via the channel of operational risk. This study innovates the measurement method of organizational stigmatization and lays the foundation for investigating the microeconomic impact of organizational stigmatization from the perspective of overseas subsidiaries.