Abstract
This study tests the explanatory power of three theoretical frameworks for the performance of cross-border affiliates, by examining the experience of 615 Hong Kong firms managing operations in mainland China. The frameworks tested are: the natural selection approach, focused on the influence of the environment; the strategic choice approach, focused on managerial action; and the contingency approach, which emphasises the ‘fit’ between environmental contingencies and internal organisation. The results show that natural selection and strategic choice have a role to play, even when controlling for each other. They also support a simple approach to contingency, but not a more complex version involving interactions. Although the business and institutional environments do have a significant influence on the performance of cross-border affiliates in a transition economy, performance can be improved through strategic managerial action. In particular, leveraging local resources by developing trust between parent and affiliate, and maintaining close control and integration with the parent, are associated with enhanced performance.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.