EconPapers    
Economics at your fingertips  
 

The impact of institutional hazards on foreign multinational activity: A contingency perspective

Arjen H L Slangen and Sjoerd Beugelsdijk ()
Additional contact information
Arjen H L Slangen: Amsterdam Business School, University of Amsterdam, the Netherlands

Journal of International Business Studies, 2010, vol. 41, issue 6, 980-995

Abstract: Prior studies have shown that institutional hazards in the form of formal governance deficiencies and informal cultural distance are both negatively related to the amount of foreign multinational activity in countries. We argue that the strength of these negative relationships varies systematically with the type of foreign activity (horizontal or vertical) and the type of institutional hazard (governance or cultural). Because institutional hazards striking vertical affiliates generally also have negative consequences for other parts of a multinational enterprise (MNE) while those striking horizontal affiliates do not, we hypothesize that institutional hazards are more negatively related to vertical foreign activity than to horizontal foreign activity. Since cultural hazards can generally be reduced or resolved once they materialize while governance hazards cannot, we also hypothesize that the impact of governance hazards on each type of foreign activity is more negative than the impact of cultural hazards on that type of activity. A panel data analysis of sales by US foreign affiliates to affiliated and local unaffiliated customers over the period 1996–2004 lends support to these hypotheses. Our findings thus show that the impact of institutional hazards on foreign MNE activity is more complex than previously assumed.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (45) Track citations by RSS feed

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v41/n6/pdf/jibs20101a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v41/n6/full/jibs20101a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
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:pal:jintbs:v:41:y:2010:i:6:p:980-995

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-07-20
Handle: RePEc:pal:jintbs:v:41:y:2010:i:6:p:980-995