Subsidiary Age Research Articles

Do Good, Have Good: Mandatory CSR Policy and Foreign Subsidiary Performance in India

In 2013, the Companies Act in India mandated that foreign subsidiaries with specified profitability and size spend at least 2% of their net income on corporate social responsibility (CSR). The study uses this natural experiment to isolate the impact of CSR spending on multinational enterprise (MNE) subsidiary performance. Using a triple difference estimation method on 175 foreign subsidiaries from 2005 to 2020, this study finds a positive impact of the compulsory CSR regulation on the CSR spender subsidiaries. We also find that higher institutional distance and greater subsidiary age benefit affected subsidiaries, positively impacting their performance because of mandatory CSR spending. The findings offer suitable recommendations for managers and policymakers in emerging markets as navigating regulatory CSR policies in the host country requires considering both resource-based and institutional environment factors.

Unlocking subsidiary performance: exploring the impact of subsidiary TMT composition, PCN tenure and subsidiary age

PurposeThe purpose of this paper is to study the relationship between subsidiary manager’s demographic characteristics and performance, while incorporating the subsidiary context. We draw upon upper echelon theories and International Business theories to understand this relationship.Design/methodology/approachUsing a dataset based on listed Multinational subsidiaries in India we use linear regression to establish the relationship between subsidiary external performance (host market performance), subsidiary internal performance and subsidiary manager’s demographic characteristics.FindingsWith our data set we find a positive relationship between percentage of host country nationals (HCN) in the Top Management Team (TMT) and subsidiary host market performance and that subsidiary age moderates this relationship. We also find an inverted U-shaped relationship between parent country nationals (PCN) tenure and subsidiary performance.Research limitations/implicationsOne of the limitations is that our study views the strategy process through the Upper Echelons (UE) theory lens, as a clearly specified planning process that associates strategy with intentionality. The opportunity that emanates at lower levels can turn an intended strategy into something different than what was started.Practical implicationsThe findings in this paper can be the basis for decision making on the constitution of leadership teams.Originality/valueThere is a dearth of empirical evidence and studies on TMTs in the subsidiary, particularly from the non-North American context. Using a unique data set of listed multinational subsidiaries in India, the paper explores the impact of TMT demographics such as tenure of the TMT and age of the subsidiary operations on the performance of the subsidiary.

Political strategies of Chinese firms in Germany: an institutionalist perspective

PurposeChinese outward foreign direct investment (OFDI) often causes negative public responses, particularly in western industrialized countries. An important instrument of Chinese multinational corporations (MNCs) to overcome these concerns is the use of political strategies. The paper aims to discuss these issues.Design/methodology/approachBased on institutionalist theory, the author formulates research hypotheses and tests them with a sample of 611 subsidiaries of Chinese MNCs in Germany.FindingsThe study shows that CEO political connection is positively associated with the use of the information and financial incentives strategies, while state ownership influences the use of the financial incentives and reputation-building strategies. Also, moderating effects of subsidiary age on these three political strategies are revealed.Originality/valueThe author derives implications for the literature on corporate political strategies as well as for research on Chinese OFDI, institutional theory and international management theory.

Subsidiary Staff Composition and Repatriation of Earnings: Moderating Effects of Subsidiary Ownership and Age

해외 자회사로부터 본국에 있는 모기업으로의 본국 송금은 다국적 기업에게는 글로벌전략을 추진 하는 데 있어서 중요한 문제이고 국가적으로는 해외직접투자의 효과에도 영향을 미칠 수 있는 문제 이다. 본 연구는 해외 자회사와 본국 모기업의 관계가 대리인과 주인 관계라는 것에 주목하여 대리 인인 해외 자회사의 관리자구성이 본국 송금에 어떠한 영향을 미치는지를 조사하였다. 해외에 진출 한 637개 한국다국적기업 자회사의 본국 송금과 관리자구성을 분석한 결과 본 연구는 자회사의 관리자급에서 현지인 관리자의 비율이 높을수록 본금 송금이 줄어든다는 것을 발견하였다. 또한, 이러한 현지인 관리자의 비율과 본국 송금의 관계는 자회사의 소유 형태와 자회사의 나이에 따라 달라진다는 것을 발견하였다. 기존의 연구들이 국가의 세금과 내부적 통제에 초점을 맞춰 본국 송금을 설명한 것에 비해 본 연구는 자회사의 인력구성이 본국 송금에 영향을 미칠 수도 있다는 것을 보여주어 본국 송금 연구에 새로운 방향을 제시할 뿐만 아니라 자회사가 모기업의 지시만을 따르는 수동적인 조직이 아니라는 최근의 시각에도 시사점을 주고 있다.

Determinants of foreign-owned subsidiary performance in emerging economies

PurposeThe purpose of this study is to expand our understanding of performance determinants in foreign-owned subsidiaries (FOSs) located in an emerging economy.Design/methodology/approachA survey has been conducted of all known FOSs in Taiwan.FindingsThe results show that intra-organisational relationships and subsidiary competences are positively associated with various performance dimensions. Being located in a global city, as well as geographically distant from the home country, seem to have the opposite impact. The moderating factors of subsidiary age and authority are partially relevant.Research limitations/implicationsThis study is based on a cross-sectional sample of FOSs in Taiwan.Practical implicationsThe study shows that in an emerging market context, being strongly linked with the rest of the multinational enterprises might still be more conducive to subsidiary performance than venturing out. This is an important consideration, given the constant resource constraints for managers.Practical implicationsThis study highlights important factors that ought to be taken into consideration by policymakers to attract suitable foreign direct investment.Originality/valueThis study provides a comprehensive test of major performance determinants for FOSs located in an emerging economy.

Foreign subsidiary top manager nationality and language policy: The moderating effects of subsidiary age and size

Despite their alleged communication, control, coordination, and learning-related benefits, little is known of factors that affect language policies in multinational corporations (MNCs). In this paper, I draw on agency theory to focus on the effect of MNC subsidiary top manager nationality on subsidiary language policy. Specifically, I hypothesize that subsidiaries with expatriate top managers have more language policies than subsidiaries with host country national top managers. In addition, I hypothesize that subsidiary age and size moderate the effect between subsidiary top manager nationality and language policy, such that older and larger subsidiaries with expatriate top managers have more language policies than younger and smaller subsidiaries. Survey data from 547 subsidiaries in Japan provide support for these hypotheses. Theoretical implications and suggestions for future research are provided.

Transfer of performance appraisal practices from MNC parent to subsidiaries in Serbia

This paper seeks to address one of central issues in the international human resource management literature regarding the extent to which foreign subsidiaries of multinational companies (MNCs) tend to implement performance appraisal practices and policies of the parent company versus those of local companies in the host country. The study conducted in 65 subsidiaries of foreign- owned multinational companies in Serbia found that performance appraisal practices in MNC subsidiaries in this transition country closely resemble parent company practices. The conclusion drawn from the study is that the transfer depends mainly on dependence on parent inputs, the degree of parental control, and subsidiary age, implying that MNCs need to take these variables into consideration when deciding whether to transfer their performance appraisal practices to their subsidiaries in this transition country or to accept local practices.

Subsidiary Characteristics and Impact on Subsidiary Strategic and Operational Autonomy

The study draws on survey evidence from 332 foreign subsidiaries in a developed (New Zealand) and a developing (Brazil) economy to examine the relationship of MNE subsidiary characteristics (age and size) to subsidiary strategic and operational autonomy. It is found that subsidiary age and size do not affect subsidiary strategic autonomy, but subsidiary size may affect subsidiary operational autonomy. It is concluded that subsidiary size affects subsidiary operational autonomy if the subsidiary has a local market focus. The study suggests that for multi-country studies the heterogeneity of headquarter-subsidiary relationship and subsidiary national context be considered.

MNC subsidiary size and expatriate control: Resource-dependence and learning perspectives

Based on resource-dependence theory, we hypothesize a U-shaped relationship between multinational corporations’ subsidiary size and expatriate staffing level. Drawing on both resource-dependence and learning perspectives, the U-shaped relationship is further hypothesized to be moderated by parent-firm size, the amount of equity ownership of the parent firm in the subsidiary, and subsidiary age. A sample of 11,754 Japanese overseas subsidiaries was used to test the hypotheses. Results supported all four hypotheses both cross-sectionally and longitudinally, and explained 24% of the variance in expatriate staffing level. The theoretical and practical implications of these findings are discussed.

Parent company benefits from reverse knowledge transfer: The role of the liability of newness in MNEs

Research on reverse knowledge transfer (RKT) has relegated subsidiary age to a control variable. However, to the extent that subsidiary age captures experience with host countries and internal networks, it reflects accumulated knowledge stocks and capabilities. We draw on organizational ecology theory to theorize that subsidiary age is an important determinant of parent company benefits from RKT and that RKT from older subsidiaries is viewed as more beneficial to the parent company than RKT from younger subsidiaries. This relationship is negatively moderated by the use of acquisitions and majority-owned joint ventures, and positively moderated by the use of socialization mechanisms.

MNC Subsidiary Size and Expatriate Control: Resource Dependence and Embeddedness / Learning Perspectives

We hypothesize a U-shaped relationship between multinational corporations’ (MNCs’) subsidiary size and expatriate staffing level based on resource dependence theory. Furthermore, based on resource dependence and embeddedness / learning perspectives, the U-shaped relationship is hypothesized to be moderated by parent firm size, equity ownership of the parent firm in the subsidiary, and subsidiary age. A sample of 9579 Japanese overseas subsidiaries over the period 1996-2005 was used to test our hypotheses. Results supported all four hypotheses. There is a U-shaped relationship between subsidiary size and expatriate staffing level. The U-shaped curve is flatter for subsidiaries with larger parents; and steeper for subsidiaries in which the parent firm equity ownership levels are higher. The U-shaped curve gets flatter with increasing subsidiary age. Overall, the variables related to our hypotheses explain approximately 23% of the variance in expatriate staffing level. The theoretical and practical implications of these findings are discussed.

Valuing Japan-based German expatriate and local manager's functions: do subsidiary age and managerial perspectives matter?

Managerial functions valued by expatriates and reasons for appointing host country managers were examined in an exploratory, multimethod (interview and questionnaire) study with expatriates and local managers as the respondents. Based on theoretical perspectives of agency theory, transaction costs theory, resource-based views and organizational learning theory, changes in the valuation of these functions were hypothesized and examined for subsidiary age and nationality of the respondent. Expatriate and local managers' views supported previous research on certain management functions but differed on others (e.g. management development). The data indicated curvilinear relationships for a number of managerial functions between nationality of top manager and age of the subsidiary. Strategic factors were analysed by subsidiary age and nationality of the respondent manager to understand more about maturity of host company operations and strategic orientations. The results indicated the growth in the strategic functions of technological leadership and market development/branding in older subsidiaries. Implications of the results were discussed.

Assets growth, foreign ownership and type of industry in multinational companies

This empirical study explores first the relationship between type of industry and subsidiary age, export ratio and MNCs’ firm factors. Second, we examined the impact of country of origin, foreign ownership and parent’s specific factors on asset growth ratio (AGR). Based on data derived from 2500 foreign companies in Japan, the findings show that the factors of foreign ownership, experience in host market, country of origin, export and parents company’s sales and the number of employees as a proxy of firm size have significantly effect on AGR. Also our finding shows that foreign companies in manufacturing industries are more likely to be as an international joint venture with a foreign manager and higher ratio of import and greater number of foreign employees. Finally, contrary to our expectations, we found that the total asset of parent company has negatively associated with type of industry. In the other word, firms in service industries are more likely to have greater total asset than those in manufacturing sectors.

Firm‐specific capabilities and foreign direct investment activities of Turkish manufacturing firms

PurposeThe purpose of this paper is to investigate the capabilities and characteristics of Turkish manufacturing firms that engage in outward FDI activity. To this end, the paper aims to explore how these firms' capabilities vary with the sample characteristics including subsidiary age, size, sector, host country location, ownership pattern and market entry mode.Design/methodology/approachThe data were gathered via cross‐sectional survey from a sample 94 Turkish manufacturing firms (TMFs) that have subsidiaries based in 28 different countries. Both univariate and multivariate tests were used to analyze the data.FindingsFindings show that sample firms had strong firm‐specific capabilities when they started to expand their business activities through foreign direct investment (FDI). The firm‐specific capabilities were grouped into four categories as operation‐related, product‐related, marketing‐related and management‐related. While the capabilities of the sample firms varied to a moderate extent with their age and size, and to a limited extent with market entry mode, no significant differences were noted with respect to the industry, host country location and ownership pattern.Research limitation/implicationRelying on the perceptual assessment of single respondents constitutes the main limitation of this study. There is also a need to collect data from other emerging or developed countries to enable comparisons between Turkey and other countries.Originality/valueThis is one of the few studies which attempt to examine the firm‐specific capabilities of FDI firms from an emerging country.

The diminishing effect of cultural distance on subsidiary control

This paper explores the diminishing influence of national cultural distance on two subsidiary control issues, expatriate staffing and parent company ownership level of the foreign subsidiary. Previous studies have produced conflicting findings: one stream of research argues that when cultural distance is greater firms increase their level of control; while the other stream suggests that greater cultural distance is associated with a loosening of control. To reconcile these discrepant outcomes we hypothesize and find that subsidiary age moderates the effect of cultural distance on expatriate staffing and ownership. Cultural distance has a significantly greater impact on subsidiary control mechanisms for newer subsidiaries than for older subsidiaries. Implications for future research are discussed.

ESTABLISHMENT, SURVIVAL, SALES GROWTH AND ENTRY STRATEGIES OF JAPANESE MNCs SUBSIDIARIES IN INDIA

This empirical study explores first the relationship between operating years and entry strategies based on wholly-owned and joint venture companies. Second, we examine the effects of equity ownership, size, entry strategy and subsidiary age on the sales growth ratio and the subsidiary's survival. Our findings show that in recent periods, the multi-national companies (MNCs) prefer to acquire high levels of equity ownership, including full ownership subsidiaries, especially when the subsidiary is in the manufacturing industry. Our results imply that capital, the age of the venture, the number of employees and full equity ownership affect survival. Finally, we find that subsidiaries with a small number of employees are likely to have a superior sales growth ratio and are more likely to survive.

Assessing the Regional Transactions of Foreign Manufacturers in Wales: Issues and Determinants

This paper examines the determinants of foreign manufacturing regional transactions using data derived from an expenditure survey in Wales. The paper assesses the significance of various factors including subsidiary age and plant size, as well as specific industry influences, and explores the dynamics of local purchasing propensities through time. The paper also considers the role of buyer‐supplier partnerships in productivity spillovers at the regional level.

Active euthanasia and physician-assisted suicide in Dutch nursing homes: patients' characteristics.

We wished to obtain information about the principal and subsidiary diagnoses, sex, age, marital status, religion and background characteristics of Dutch nursing home patients to whom euthanasia/assisted suicide (EAS) was administered. We performed an exploratory, descriptive, retrospective study involving all Dutch nursing home physicians (NHPs) who in September 1990 were members of the Dutch Association of Nursing Home Physicians (NVVA; n = 713). An anonymous printed questionnaire in two parts was used. Part 1 was intended for all respondents and was expected to give insight into the nature and extent of EAS in Dutch nursing homes. Part 2 was intended only for respondents who had indicated in part 1 that they had administered EAS. They were asked to describe their last case of EAS. The study covered the period from 1986 to mid-1990. There was an 86% response. The respondents described 86 cases of EAS. Sixty-nine of these took place in a nursing home. The majority of patients to whom EAS was administered were suffering from a malignant neoplasm (53%). EAS was administered more often to men than to women. The average age of the patients was 70.9 years. When EAS was administered, the patients on average had been in the nursing home for 13.1 months. Dutch nursing home patients who were given EAS differed in various respects from 'the average nursing home patient'. The principal diagnosis for patients who were given EAS was a malignancy, whereas relatively few physically ill nursing home patients die as a result of a malignancy. The patients to whom EAS was administered were younger and more often male. EAS patients had been in the nursing home for a shorter time than the other somatic (physically disabled) patients who died during the study period.