When Digital Capabilities of MNC Subsidiaries Matters: The Moderating Effect of Subsidiary Autonomy in Korea

Jaehwi Jeong, Donseung Choi and Jangsoon Kim ()
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Jaehwi Jeong: Department of International Trade, Kwangwoon University, Seoul 01897, Korea
Donseung Choi: Department of International Trade, Andong National University, Andong 36729, Korea
Jangsoon Kim: KU-KIST Graduate School of Converging Science and Technology, Korea University, Seoul 02841, Korea

Sustainability, 2022, vol. 14, issue 22, 1-13

Abstract: This study investigates the relationship between digital capabilities and the performance of MNC Korean subsidiaries and the moderating effect of subsidiaries’ autonomy. We examined the effect of digital capabilities of MNC subsidiaries on financial and non-financial performance represented by corporates’ sustainability and the effect of the subsidiary autonomy that controls them. According to the result of the analysis, digital capabilities drive innovation enhancing both financial and non-financial performance of subsidiaries. In addition, it was found that the autonomy of the subsidiary significantly strengthens the positive relationship between the subsidiary’s digital capabilities and financial performance. Instead, the autonomy of the subsidiary does not appear to moderate the effect of the relationship between digital capabilities and non-financial performance significantly. These results suggest that subsidiaries’ digital capabilities improve financial and non-financial performance. In addition, the autonomy of subsidiaries suggests that the digital capabilities of subsidiaries can be a positive factor in the process leading to financial performance.

Keywords: digital capabilities; sustainability; MNC; Korean subsidiaries; subsidiary autonomy; moderating effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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