Performance of Multinational Firms’ Subsidiaries: Influences of Cumulative Experience
Gerald Yong Gao,
Jiangyong Lu and
Zhigang Tao ()
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Gerald Yong Gao: University of Missouri-St. Louis
Yigang Pan: York University
Jiangyong Lu: Tsinghua University
Management International Review, 2008, vol. 48, issue 6, 749-768
Abstract and Key Results In this study, we examine the impact of cumulative experience that arise from a series of sequential entries on the performance of foreign subsidiaries of multinational firms. Drawing upon the literature on organizational learning, we propose that multinational firms acquire different types of experience at the firm level, including general entry experience, entry specific experience, and exporting experience, which exert different influences on their performance. We also investigate the effect of experience on performance at the subsidiary level. Using a dataset of 245 subsidiaries of 81 large U.S. firms in China, we find that firms’ entry specific experience, exporting experience, and subsidiary level experience exhibit significant effects on the return on sales of foreign subsidiaries. Further, the effect of exporting experience gets weaker as firms accumulate more entry specific experience. Firms’ general entry experience, however, is not related to subsidiary performance.
Keywords: Organizational Learning; Sequential Entries; Experience; Performance (search for similar items in EconPapers)
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