Effect of operating multiple affiliates on the performance of subsidiaries in the same host country

Oskar Kowalewski ()

Research in International Business and Finance, 2023, vol. 65, issue C

Abstract: Little has been reported on the effect of affiliates on their foreign subsidiary performance. In the context of multinational banks (MNBs), we empirically investigate how the establishment of multiple affiliate forms affects the performance of their subsidiaries in the same host country. We also examine the factors influencing and effective entry mode choices. Based on the transaction cost theory, we hypothesize that MNBs can benefit foreign subsidiaries using entry modes based on cost minimization and value maximization. For the period 2005–2015, we test this hypothesis on a sample of 1026 subsidiaries established by 96 MNBs across 106 countries. The results show that the simultaneous operation of multiple affiliate forms positively influences their foreign subsidiary’s performance. The transaction costs determine MNBs’ entry choices. MNBs can enhance their subsidiary’s performance using entry modes considering institutional and cultural contexts and achieving cost and value targets in the host country. This study has policy implications in that it calls for collaboration between host and home countries to develop effective supervision and resolution regimes for MNBs operating multiple affiliate forms in host countries.

Keywords: Multinational banks; Transaction cost theory; Entry mode choice; Cultural and institutional proximity (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531923000521
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Effect of operating multiple affiliates on the performance of subsidiaries in the same host country (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000521

DOI: 10.1016/j.ribaf.2023.101926

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().