EconPapers    
Economics at your fingertips  
 

Integration-oriented strategies, host market corruption and the likelihood of foreign subsidiary exit from emerging markets

Michael A. Sartor () and Paul W. Beamish ()
Additional contact information
Michael A. Sartor: Queen’s University
Paul W. Beamish: Western University

Journal of International Business Studies, 2020, vol. 51, issue 3, No 6, 414-431

Abstract: Abstract Extant research has found that more pronounced levels of corruption in foreign host emerging markets increase the likelihood that subsidiaries established by multinational enterprises (MNEs) from developed countries will exit. We synthesize insights from the organizational perspective of corruption and the integration-responsiveness paradigm to propose that integration-oriented strategies will weaken the positive relationship between corruption and the likelihood of exit at high levels of host market corruption. We develop and test hypotheses pertaining to the main effect of corruption on the likelihood of subsidiary exit, as well as the moderating impacts of a firm’s equity ownership strategy and its expatriate staffing strategy upon this relationship. We theorize that uncertainty operates as the mechanism that underpins the corruption-market exit relationship, and that an MNE’s strategic choices with respect to its subsidiary investments contribute to reducing this uncertainty. We find that an increase in the foreign-investing MNE’s equity ownership share negatively moderates the positive relationship between corruption and the likelihood that foreign subsidiaries established by developed market MNEs will exit host emerging markets when corruption is high. However, the marginal effects results do not support the expatriate staffing strategy hypothesis. Our work provides guidance to developed country MNEs that seek insights with respect to the utility of strategies that might be implemented in host emerging markets characterized by more pronounced levels of corruption.

Keywords: corruption; uncertainty, integration-responsiveness; the organizational perspective of corruption, foreign subsidiaries in emerging markets, equity share; expatriate staffing, subsidiary survival and market exit, event history analysis (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1057/s41267-019-00297-7 Abstract (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:51:y:2020:i:3:d:10.1057_s41267-019-00297-7

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

DOI: 10.1057/s41267-019-00297-7

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 2020-06-20
Handle: RePEc:pal:jintbs:v:51:y:2020:i:3:d:10.1057_s41267-019-00297-7