Multinationals’ intraregional geographic expansion and foreign subsidiary performance

Naoki Ando

International Business Review, 2024, vol. 33, issue 1

Abstract: This study investigates how the intraregional geographic expansion of a multinational enterprise (MNE) affects the performance of foreign subsidiaries in the region. While previous studies have primarily focused on the impact of intraregional expansion at the overall MNE level, this study explores its subsidiary-level effect. The non-linear relationship between intraregional geographic expansion and the performance of foreign subsidiaries in the region is examined by adopting a two-stage least squares model for a panel dataset of Japanese MNEs’ investments in three geographic regions. The findings demonstrate a curvilinear relationship between intraregional geographic expansion and the performance of foreign subsidiaries. Furthermore, the effect of intraregional geographic expansion on subsidiary performance depends on the attributes of foreign subsidiaries in the regional network of sister subsidiaries. Specifically, this study demonstrates that geographically isolated and small subsidiaries and those co-owned by local partner firms gain large benefits from intraregional expansion.

Keywords: Geographic expansion; Intraregional expansion; Interregional expansion; Japanese firms; Liability of foreignness; Multinational enterprises; Foreign subsidiary performance (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1016/j.ibusrev.2023.102208

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