Internalization advantage and subsidiary performance: The role of business group affiliation and host country characteristics

Ajai S Gaur (), Chinmay Pattnaik (), Deeksha Singh () and Jeoung Yul Lee ()
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Ajai S Gaur: Rutgers Business School - Newark and New Brunswick
Chinmay Pattnaik: University of Sydney Business School
Deeksha Singh: Rutgers University
Jeoung Yul Lee: Chongqing Technology and Business University

Journal of International Business Studies, 2019, vol. 50, issue 8, No 3, 1253-1282

Abstract: Abstract We extend internalization theory by examining the contingencies associated with market internalization and its impact on foreign subsidiary survival. Based on a sample of 6170 subsidiary–year observations in 63 countries belonging to 292 MNCs from Korea during 1995–2013, we find that greater product and labor market internalization have weaker impacts on the survival of subsidiaries operating in countries with more developed institutional environments but stronger for subsidiaries of MNCs affiliated with business groups. The impact of business group affiliation is further dependent on host country institutional development, and the diversification and size of the business group.

Keywords: internalization advantages; MNCs; business groups; subsidiary survival; Korea (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (49)

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DOI: 10.1057/s41267-019-00236-6

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