Multinational enterprise parent-subsidiary governance and survival

Bassam Farah, Dwarka Chakravarty, Luis Dau and Paul W. Beamish

Journal of World Business, 2022, vol. 57, issue 2

Abstract: We investigate the relationship between multinational enterprise parent-subsidiary governance (MNEPSG), host country governance quality (HCGQ), and foreign subsidiary survival. We draw upon agency theory, MNEPSG literature, and institutional theory to develop a holistic conceptual model. We test our hypotheses using a large longitudinal sample of 1,711 MNEs and 13,398 subsidiaries in 63 countries from 1990-2013. We find that key MNEPSG mechanisms (Ownership, Expatriates, and Regional Headquarters) positively impact foreign subsidiary survival, whereas HCGQ negatively impacts it; and that increasing Ownership and Expatriates is more effective in high HCGQ contexts. We discuss important implications for research and practice.

Keywords: Agency theory; Institutional theory; Multinational enterprise parent-subsidiary governance; Ownership; Expatriates; Regional headquarters; Host country governance quality; Survival; Performance (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:57:y:2022:i:2:s1090951621000821

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DOI: 10.1016/j.jwb.2021.101271

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