Foreign Multinational Corporations Research Articles

Analysis of Market Entry Strategies for Foreign Multinational Corporations in India A Market Research Study

This research paper explores market entry strategies for foreign multinational corporations (MNCs) in India, aiming to provide actionable insights for navigating the complexities of this dynamic market landscape. Through a qualitative research design, semi-structured interviews were conducted with key industry experts and executives of foreign MNCs operating in India. The findings reveal that joint ventures are the preferred entry mode, with factors such as access to local knowledge, regulatory requirements, and cultural compatibility influencing entry mode selection. Performance evaluation metrics primarily focus on revenue growth, market share, and customer satisfaction, while adaptation strategies include product localization, marketing customization, and supply chain optimization. Challenges faced by foreign MNCs in market entry include regulatory compliance, cultural differences, and competition. Overall, this study contributes to filling the identified literature gap by providing a nuanced understanding of market entry strategies and their effectiveness in the Indian context. The implications of these findings extend to both academia and practice, offering opportunities for further research and guiding strategic decision-making for MNCs seeking to establish and expand their presence in India.

Multinationals’ value chain configuration for product diversification in emerging markets: Western firms in China

PurposeThis study aims to analyse how multinational corporations (MNCs) organise value chain activities to penetrate new market segments. It contributes by expanding traditional decisions regarding the vertical fine-slicing of value chain activities (whether performed internally or externally) and the consideration of resource-sharing decisions (integration or separation) for each value chain function.Design/methodology/approachThe authors draw on primary data collected from two case study firms operating in the large emerging Chinese market: Volvo Construction Equipment AB and Epiroc AB. In-depth cases illustrate how foreign MNCs expand into new market segments and simultaneously target both the lower-priced mid-market and the premium segments in the Chinese mining and construction industry.FindingsThe results reveal that product diversification creates challenges for managers who must oversee new (vertical) value chains, often simultaneously. Beyond geography and modes of governance, managers must decide whether to integrate or separate value chain activities for the new product lines. The study identifies four main strategic choices for firms to address this complexity, focusing on the decision to internalise or externalise (i.e. within or across organisational boundaries) and integrate or separate value chain activities between different product lines.Originality/valueThis study builds upon the internalisation theory and recent international business contributions that focus on value chain configurations to explain MNCs’ product diversification as a growth strategy in a host emerging market. It also sheds light on the choice of conducting new activities in-house or externally and elucidates firms’ managerial decisions to operationally integrate or separate individual value chain activities. The study provides insights into the drivers explaining managerial decisions to configure value chain activities across product lines and contributes to the growing body of literature on MNC activities in emerging economies by highlighting that product diversification impacts entry mode diversity and resource sharing across units.

Who Will Serve the Reputationally Compromised Boards? Politicians’ Appointment to the Boards of Chinese MNCs in the US

The appointment of politicians to the corporate boards has long been recognized as an important strategy for multinational corporations (MNCs) to navigate the institutional challenges in foreign markets. While extant scholarship acknowledges the firm’s needs in the foreign markets that are served by the resources possessed by the politician, there is limited understanding of a politician’s considerations in a politician’s appointment decision. In this study, we consider both firms’ and politicians’ perspectives and theorize the appointment of politicians to the boards as a mutual selection process in which both firm and politician select each other. Emerging markets multinational corporations (EMNCs) suffer severe legitimacy challenges in developed countries due to the liability-of-origin, therefore, EMNCs are more motivated to bring-in politician directors with high political capital to overcome their legitimacy challenges, but these politicians may not join the EMNCs due to the potential reputational loss of associating with EMNCs. Using politician-year level dataset of politician director appointments made by Chinese MNCs operating in the United States, our Cox hazard regression results find an inverted U-shape relationship between a politician’s political capital and his/her likelihood of joining the board of Chinese MNCs. As such, a politician having a moderate level of political capital is more likely to join the board of a reputationally compromised foreign MNC. This relationship is moderated by firm ownership. Specifically, the effect is stronger when Chinese MNCs are state owned and weaker in the case of joint venture. Our study bears rich implications for theory and practice.

Comparative Assessment of Global Value Chains' Influence on National Economies

In recent decades, a predominant trend in the transformation of national economies worldwide has been the extensive establishment of global value chains and the increased activities of transnational corporations (TNCs). Despite the scale of these phenomena, they have not received adequate scholarly attention, both at the level of individual countries and on a global scale. This paper presents the results of a comprehensive analysis that combines theoretical approaches with empirical investigations of the interplay between the formation and vigorous expansion of global value chains and the dynamics of national economic transformation worldwide. This relationship is examined in the context of foreign multinational corporations operating in sectors such as chemistry and pharmaceuticals, electronics, electrical equipment, and the automotive industry.To achieve the objectives of this study, a range of complementary research methods were employed, including descriptive analysis, comparative analysis, generalization and grouping techniques, and cartographic analysis. The study yields several key findings:Firstly, a global trend of progressive reduction in the share of domestic producers within the industries under consideration has been observed. This trend is most conspicuous in the countries of the former socialist bloc in Central and Eastern Europe, including Poland, Bulgaria, the Czech Republic, Lithuania, Latvia, Estonia, and Romania. These countries previously maintained domestic production levels exceeding 50% of the total volume for the specific product types.Secondly, the field of automobile production exhibits the highest proportion of foreign companies contributing to the total volume of products manufactured. In 33 out of the 58 countries analyzed, foreign multinational corporations account for more than 50% of production. Thirdly, a selection of countries in Western Europe, the Middle East, and the Asia-Pacific region—such as Germany, Italy, France, Israel, the USA, China, Japan, the Russian Federation, India, and Korea—play a substantial role in the development of global value chains through the active expansion of their national TNCs. International companies from these countries are progressively shaping a global socio-economic framework.Lastly, recent years have seen the emergence of a new stage in the evolution of global value chains, prompted by exceptional factors such as the COVID-19 pandemic, the trade conflict between China and the United States, and the conflict in Ukraine. This stage necessitates a profound reconsideration of the strategies employed by current participants in global chains, driven by the imperative of preserving their sustainability.

Driving financial results is not the only priority! An exploration of the future role of chief financial officer: a grounded theory approach

PurposeThis study aims to develop a conceptual framework for the role of chief financial officer (CFO) in an ever-changing environment. As previous research focused on responding to specific crises, there have been theoretical and practical gaps in the role of CFO. The study's goal is to fill a critical gap by developing a comprehensive and integrated set of roles to assist the CFO in a constantly changing environment.Design/methodology/approachUsing a grounded theory approach, semi-structured interviews and observations were conducted with 21 CFOs from various industries in Thailand, including foreign multinational corporations and domestic companies with international operations. CFOs were asked how they frame their roles in the face of an ever-changing environment and how they prepare for the future.FindingsThe iCFO model is developed, which identifies the critical “core” roles of the CFO in securing the business foundation, as well as the “future opportunities” roles that function as growth engines for long-term business strength. The research delves into the importance of integrity, ethical mindset and corporate governance in the role of the CFO. The iCFO model is designed to help guide future research and provide practical applications for CFOs in both domestic and international contexts. The term “core” refers to the CFO’s primary responsibilities, which include driving profitability, managing risks and optimizing business performance. The “future opportunities” component focuses on the roles that CFOs can play in strengthening the future of business by optimizing investment efficiency, driving digital transformation and being the CEO’s business partner. The findings also emphasized “integrity,” which must encompass all decisions, actions or recommendations made by the CFO.Originality/valueThe study offers unique perspectives on an emerging economy, providing new insights. Through interviews with 21 CFOs, it contributes empirical evidence on the development of roles in accounting and finance, emphasizing good governance practices. The findings highlight the integrated role of the CFO and their self-reflection on their value within the company. Significantly, the study's implications are relevant and applicable to a global audience, particularly in developing economies that prioritize growth. Future studies could incorporate integrated thinking into the iCFO model to address social, environmental and economic factors, making it more universally relevant. Additionally, exploring the adoption of the chief value officer context in developing markets could enable CFOs to expand their focus beyond financial metrics, embracing a comprehensive approach to value creation. By integrating these concepts into the iCFO model, CFOs can effectively drive sustainable and impactful business outcomes on a global scale.

Outsourcing in Africa: How do the interactions between providers, multinationals, and the state lead to the evolution of the BPO industry?

AbstractWe explore the evolution of Africa’s business process outsourcing (BPO) industry. In so doing, we seek to derive policy and managerial implications on how African suppliers can grow and become more attractive to foreign multinational corporations (MNCs). We discuss insights from the literature on (BPO) clusters and how these evolve. Our conceptual arguments are supported by a case study of the evolution of the Kenyan BPO cluster through three broad stages: embryonic, early, and developmental. We argue that this evolution has been hampered by factors including the small and sometimes informal nature of local suppliers, the reluctance of foreign multinationals to make long-term commitments, and the intermittent devotion by the Kenyan government to supporting BPO clusters. Accordingly, we suggest direct and indirect policy initiatives to grow the industry toward a more mature stage, increase knowledge spillovers and formalization levels, and improve working conditions.

The antecedents of MNC political risk and uncertainty under right-wing populist governments

AbstractRight-wing populist parties who obtain governmental power rely on ethno-nationalist mobilization for domestic legitimacy. They may therefore adopt policies that explicitly seek to disadvantage foreign multinational corporations (MNCs). Understanding what factors increase a foreign MNC’s exposure to adverse action by right-wing populists is an understudied question in the field of international business policy. We investigate this question in post-socialist member states of the European Union, which constitute extreme cases of right-wing populist government power. As such, they constitute a fertile ground to further our theoretical understanding of the distinction between calculable political risk and incalculable political uncertainty. Through a case study-based theory-building approach, which draws on existing literature and interview data, we derive a series of propositions and develop a research agenda. We identify factors at the country-, sector-, and firm-level that influence exposure to adverse policy action by host-country governments. We explore when political risk may turn into political uncertainty and provide suggestions to foreign MNCs operating in right-wing populist contexts on how to reduce this uncertainty. Our study provides insights for policy makers too, who should be aware of the impact political shifts towards right-wing populist governments have on political uncertainty for foreign companies.

From local modification to global innovation: How research units in emerging economies innovate for the world

More and more companies are turning to emerging markets as sources of global innovation to help transform business and society. However, building innovation capabilities in emerging markets is still elusive for most companies. To understand how some companies are successfully building these capabilities, we examined workers within R&D units in China across six foreign multinational corporations. In contrast with prior literature that emphasizes a structural view of who the workers interacted with to innovate, our inductive analysis highlights a behavioral view of how R&D unit personnel interact during the problem and solution search process. We identified two key behaviors associated with the problem and solution search: (1) observing customers in their everyday context, and (2) uncovering general knowledge principles from internal experts. Respectively, these behaviors helped R&D workers to question assumptions about existing products as they relate to customers and to apply useful principles from expert knowledge rather than copying solution templates. Our findings offer an alternative path to building global innovation capabilities in markets where structural constraints exist for the company.

The Transformation of the Romanian Economy Through Privatization and Internationalization

In the late 1980s, Central and Eastern European nations (CEE) rejected communism and embarked on a journey towards free-market democracy. As part of this transformation, the Romanian economy transitioned from communism to capitalism. The purpose for our paper is to suggest insight from the Romanian experience that may be useful for nations in Asia, Africa, Middle East or South America that maybe be undergoing a similar transition. The main results of our paper is to substantiate the precepts of institutional theory, that a system is best transformed through external, international pressures. Our contribution illustrates this transformation through the case studies of Romtelecom, Dacia, and Petrom, Romanian state-owned enterprises (SOE) privatized by foreign multinational corporation (MNC). We distinguish between formal and informal institutions with the latter tending to be overlooked by traditional researchers. Through these longitudinal surveys we argue that multinational corporations are possibly the best generators of informal institutions.

АНАЛІЗ СТАНУ, ТЕНДЕНЦІЙ ЕКОНОМІЧНОГО РОЗВИТКУ ТА ПОЗИЦІЇ КИТАЮ В ГЛОБАЛЬНІЙ ЕКОНОМІЦІ

The paper is devoted to the analysis of China's position in the global economy. China became one of the fastest growing economies in the world since it’s opening to foreign trade and investment in 1979. The main factors that contributed to rapid economic growth were defined as: large-scale capital investments, rapid growth in productivity, economic reforms that led to the efficiency increasing of the economy, production growing and resources expanding for additional investments in the economy. The real annual growth of China's GDP from 1980-2022 was analyzed. From 1979 to 2017, China's real GDP grew at an average of almost 10% annually. But the COVID-19 pandemic and the measures taken to contain it caused the biggest slowdown in China's economic growth in 2020, to 2.2%. A comparison of the shares of China and the United States in the world GDP by PPP was made. Accordingly, the conclusion – it was the first case in history when China was the world's largest economy in 2017. It was determined that the United States and China are the two largest economies in the world by both nominal GDP and GDP per PPP (purchasing power parity). The US leads in nominal terms, while China leads in PPP terms, overtaking the US by 39%. Over the past few years China has become the world's largest exporter and ranks second place among the world's largest importers thanks to its huge active trade balance. According to the World Investment Report 2022 of the United Nations Conference on Trade and Development (UNCTAD), the United States and China are the main recipients of global FDI (foreign direct investments), as well as the main investors. As China continues to lead the global recovery from the adverse economic effects of the COVID-19 pandemic, foreign multinational corporations are doubling their investments in China, establishing thousands of new firms and expanding existing ones. The main recipients of Chinese FDI are Hong Kong, the US, Singapore and Australia. Hong Kong absorbs the largest amount of FDI from China and plays a special role. The distribution of Chinese FDI by sector shows that Chinese investors most prefer investments in leasing and business services, financial services and manufacturing.

CURRENT ACTIVITIES OF TRANSNATIONAL BANKS IN THE GLOBAL ECONOMY

The article defines modern trends of transnationalization in the international banking sphere. The prerequisites for the formation and development of globalization processes in the financial and banking sphere are considered: economic factors, technological and international legal factors. The general definition of a transnational bank is substantiated, the essence of which can be considered in the context of quantitative and qualitative aspects of its definition. A general definition of a transnational bank is provided as a bank that carries out operations in more than one country. The most characteristic trends in the development of transnationalization of the international banking business are outlined, which include the universalization of bank activity, the growth of competition in the banking sector, the liberalization of banking operations, and the growth of innovative activity of banks. The negative consequences of the development of international banking operations are also determined. The characteristic trends of transnationalization in the banking sphere were studied and the leading transnational banks were selected by the level of market capitalization. The peculiarities of the development of the domestic banking system, which is considered as an attractive host area for transnationalization processes, are evaluated. The influence of transnational banks on the economy of the host country and its banking system is considered from the point of view of the consequences of financial liberalization of the world economy as a whole and the development of the domestic financial sector. Identified obstacles on the way to the formation of Ukrainian transnational structures: the instability of the economic and political situation in the state; underdevelopment of the legislative framework in matters of the status and activities of transnational corporations; strong competition from existing global multinational corporations; lack of an appropriate innovation base that could compete with the technologies of foreign multinational corporations; relatively low level of management; high «tinization» of the economy; high level of inflation, etc. The main reasons that caused the changes in the banking sector in modern globalization conditions are proven: the unification of the activities of the real sector of the economy and the financial system of the countries of the world, convergence of the rules for regulating internal and external operations; formation of a network of branches of transnational companies; transformation of the international capital market into an independent factor in the development of the world economy; increase in the share of international operations of banks in the total volume of operations. On the basis of the conducted analysis, suggestions are provided regarding the further development of the activities of transnational banks in the world economy.

The Promotion of Access to Justice through the Constitutional Development of the Doctrine of Forum Non Conveniens

South African jurisdictional principles governing cross-border litigation have seen minor development in recent years and as such, remained feudal and anachronistic. It is essential for South African courts to be equipped with the necessary jurisdictional powers to assume and exercise jurisdiction in disputes concerning its own citizens against foreign multinational corporations. This article aims to propose a way forward, centred around the constitutional reform of the South African doctrine of forum non conveniens, in a manner that advances sustainable and equitable legal development, while also simultaneously promoting the principle of transformative constitutionalism and the right of access to courts. To produce sustainable and viable solutions, a comparative analysis of both the principles of private international law and the proposed reform of the doctrine in comparable jurisdictions is undertaken. The effect of any associated international agreements and instruments applicable to these jurisdictions that may have an impact on or insight into the way forward is also examined. It is hoped that this article will result in a meaningful contribution to the discourse on the development of the jurisdictional principles of South African law, to achieve access to justice for all within Southern Africa and the African continent as a whole.

Towards Transnational Corporate Accountability for Human Rights Abuses in Africa: Analysis of Conceptual and Institutional Hurdles

Corporate conduct is diverse; its character is often dependent on the sector in which any given investment can be placed. The effects of corporate conduct on human rights could be positive or negative if assessed from the standpoint of the responsibility arising from international law for ‘all organs of society’ to protect, respect and fulfill the human rights of individuals and communities. The paper analyses the impact of foreign multinational corporations (MNCs) on human rights in developing countries and assesses the capacity of international law to regulate MNCs. The paper focuses on relations between MNCs and public institutions exercising regulatory functions over the MNCs. The empirical point of departure for the paper is whether history records MNCs and developing countries have been partners in mutually beneficial relationships. It investigates the causes of developing countries’ long-established unenviable position in the international economy by examining critically the role of foreign MNCs.

Foreign lobbying through domestic subsidiaries

AbstractHow much of lobbying activities disclosed under the Lobbying Disclosure Act (LDA) actually represent foreign clients? What are their interests? By identifying the global ultimate owners of all corporate clients filing with the LDA, I find that majority‐owned subsidiaries of foreign multinational corporations (MNCs) account for nearly 20% of corporate lobbying spending in 2015–2016. This amount is comparable to the entire foreign lobbying spending reported under the Foreign Agents Registration Act (FARA). Domestic subsidiaries of foreign MNCs are also found to lobby more frequently and spend more lobbying than American multinationals, after controlling for firm size, industry, and PAC contributions. These subsidiaries actively lobby on issue areas that clearly benefit their foreign parents. The findings suggest that foreign MNCs may actively influence U.S. policies through their domestic subsidiaries, and that the FARA captures only part of foreign lobbying in the United States.

Gaining legitimacy or exploiting opportunities? MNCs’ response to the belt and road initiative in China

PurposeThis study aims to investigate whether and why multinational corporations (MNCs) seek to reduce institutional costs of foreign direct investments (FDIs) by aligning with transnational political frameworks.Design/methodology/approachThis study uses the Chinese Belt and Road Initiative (BRI) to test whether MNCs’ subsidiaries in China increase FDI into BRI-affiliated countries after the BRI’s launch. This study compares FDIs by Chinese subsidiaries of foreign MNCs in the year before and two years after the BRI’s announcement. Hypotheses are tested for two explanations of why foreign MNCs seek to exploit the BRI.FindingsInvestments into BRI-affiliated countries increased after the announcement of the BRI, and this increase is positively moderated by institutional distance between the MNC home country and the BRI-affiliated target country. This shows that the greater the institutional costs of investing in a BRI-affiliated country, the more responsive the MNCs’ Chinese subsidiary will be to the BRI.Research limitations/implicationsThis study demonstrates that MNCs respond to transnational political frameworks. This study only studies the immediate response because the BRI is an infrastructure project. Better infrastructure will, over time, lead to more investments; however, the immediate response is due not to infrastructure but political structure.Originality/valueThe results show how MNCs use transnational political frameworks. The idea that MNCs can channel FDI through existing subsidiaries for this purpose has not previously been discussed in the literature.

Close together or far apart? The geography of host-country knowledge sourcing and MNCs’ innovation performance

ABSTRACT We investigate the influence of different host-country knowledge sources on the quality and generality of multinational corporation (MNC) innovation. We suggest that the quality of MNC innovation increases with the geographical distance from local industrial organizations. We also argue that the generality of MNC innovation increases with the distance from local research institutions, but decreases after a certain threshold. We explain these relationships based on the different cognitive and geographical distances separating MNC innovation activities from industrial organizations and research institutions. We test our arguments on a sample of US Patent and Trademark Office (USPTO) patents developed in the United States by foreign semiconductor MNCs.

EFFECTS OF HUMAN RESOURCE PRACTICES ON TURNOVER INTENTION OF MULTINATIONAL CORPORATIONS: THE MEDIATING ROLE OF INDIVIDUALISM/COLLECTIVISM

The global gradual economic recovery has restored the voluntary turnover rate to the level before the outbreak of the epidemic. Cultural differences are considered to be an additional reason for the brain drain of foreign multinational enterprises. A survey was conducted to collect responses from 202 millennial in selected foreign multinational corporations in China. Therefore, the purpose of this study is to explore the relationship between human resource practice (HRPs) mediated by individualism/ collectivism (IC) and turnover intention (TI) by adopting the recognized and well-established social exchange theory, so as to provide new academic ideas for the Millennium employee management of multinational corporations in China. This study was utilized a cross-sectional study as a tools for data collection. For data analysis, this study implemented a Partial-Least Square (PLS) as tools of data analysis. The results highlight the mediating role of individualism/collectivism, reduce Millennium employee turnover intention. In addition, the results verify the negative effect of human resource practice on turnover intention. Therefore, it is important for the management of multinational enterprises in China to develop human resources practices that meet the cultural cognitive of Chinese employees. This study is the first to measure the mediating effect of individualism/collectivism, which defines the theoretical and practical significance and the direction of future research. In addition, more cultural factors will be added to the future research.

Fostering change-oriented OCBS: an analysis of India’s IT talent

PurposeThis study aims to investigate how workplace resourcefulness (positive psychological climate), as well as personal resources (psychological capital [PsyCap]), influence work engagement to promote change-oriented organizational citizenship behaviors (Ch-OCBs) among Indian information technology (IT) personnel.Design/methodology/approachThe social exchange theory and job demands-resources model are used to provide rationale for proposing a comprehensive mechanism including antecedents, moderators as well as mediators enabling Ch-OCBs among IT personnel. Structured questionnaires were administered targeting IT professionals and their supervisors to test the proposed relationships. The obtained data from 30 supervisors and 240 subordinates were tested using confirmatory factor analysis, SEM and moderated path analysis technique.FindingsPsychological climate, PsyCap and work engagement positively relate to Ch-OCBs; PsyCap moderated the relationship between psychological climate and work engagement. Specifically, the relationship between psychological climate and work engagement has come out stronger for employees with high PsyCap. Work engagement fully mediated the relationship between psychological climate and Ch-OCBs.Practical implicationsThe findings can be critical in promoting voluntary change-focused behaviors among Indian IT personnel, for Indian and foreign (non-Indian) multi-national corporations that are interested in reaping profits by availing change-driven extra-role services of their efficient and the most preferred Indian IT employees of the world.Originality/valueThis study addresses to the call for more research on change-focused promotive part of OCB and advances the literature by providing evidence on the proposed set of associations from fast-pacing Indian economy.

Missing the Target: Brazil's Agricultural Policy Indirectly Subsidizes Foreign Investments to the Detriment of Smallholder Farmers and Local Agribusiness

Currently there is controversy about the effect of direct foreign investment in the Brazilian agricultural sector, mainly due to the impact it has on small farmers, land use, the environment, and food security. In this context, Brazil finds itself in an even more delicate situation, since in order to remain a bulwark of the economy, Brazilian agribusiness depends heavily on public policies that directly impact its treasury. This suggests there is an indirect transfer of public resources to transnational companies involved in agribusiness production chains. This paper assesses the allocation of agricultural credits in Brazil and the market share held by Brazilian groups, vis-à-vis multinational corporations in the agribusiness supply chains. The study was carried out analyzing the three largest supply chains established in the country: soybean, corn, and cattle. Results reveal that 75% of the operating credit (crédito de custeio), which represents 60% of the total government credit in Brazil, goes directly to soybean, corn, and cattle farmers. Most of this subsidized credit budget goes to the soybean farmers, which are mostly encompassed by large farmers. Results also reveal that 76.1% of the soybean supply chain in Brazil is controlled by foreign multinational corporations. These findings suggest that resources invested in large farmers that take part in supply chains controlled by multinational foreign groups end up indirectly financing foreign companies to the detriment of local smallholder farmers and domestic agribusiness. This highlights the need for restructuring Brazilian agricultural policy in favor of family farmers and domestic agribusiness.

Proximity at a distance: The relationship between foreign subsidiary co-location and MNC headquarters board interlock formation

Corporations seek various relationships, such as board interlocks, with other firms to reduce resource dependencies. The consistent theoretical expectation and empirical finding that physical proximity is an important driver for board interlock formation is seemingly at odds with the emerging and growing literature on transnational board interlock ties. We argue that the effect of proximity on multinational corporation (MNC) board interlock formation can also be attributed to the firms’ internationalization strategy, namely, when they have co-located subsidiaries in foreign markets. We call this “proximity at a distance”. We test our assumptions on a dataset covering almost 43,000 board interlocks among MNC headquarters and their 12 million subsidiary co-location pairs. We confirm that proximity among headquarters increases the odds of interlocking but also find robust evidence that co-located subsidiaries also increase firms’ propensity to interlock, particularly for transnational board interlocks. Our results help provide an explanation for the “paradox of distance” by showing that the interlock between two distant MNCs may be driven by proximity to their foreign subsidiaries. As such, we illustrate how MNCs’ resource-dependent strategic responses can occur at the headquarters level to address uncertainties experienced at the subsidiary level.