Abstract
Institutional distance has been known to be an important driver of Multinational Enterprises’ strategies and performance in host countries. Based on a large panel dataset of 10,562 firms operating in 17 emerging markets and spanning 80 home countries, we re-examine the relationship described by Gaur and Lu (J Manage 33(1):84–110, 2007) between regulatory institutional distance and subsidiary performance. We extend this research by (1) examining this relationship in the context of emerging markets, (2) examining the moderating effects of ownership strategy and host-country experience within the context of emerging markets and (3) accounting for a greater variety of institutions by including a large number of home and host countries. We find that institutional distance negatively affects subsidiary performance in emerging markets. Our findings also show that the negative effects of institutional distance on subsidiary performance are lesser for subsidiaries with partial ownership (than for subsidiaries with full ownership) and for subsidiaries with greater host-country experience. We discuss our findings with respect to Gaur and Lu’s model, which explores the relationships between these variables in a general context.
DOI
10.1007/s11575-016-0301-z
Publication Date
2017-04-01
Publication Title
Management International Review
Volume
57
Issue
2
Publisher
Springer Verlag
ISSN
1861-8901
Embargo Period
2024-11-19
First Page
179
Last Page
207
Recommended Citation
Shirodkar, V., & Konara, P. (2017) 'Institutional Distance and Foreign Subsidiary Performance in Emerging Markets: Moderating Effects of Ownership Strategy and Host-Country Experience', Management International Review, 57(2), pp. 179-207. Springer Verlag: Available at: https://doi.org/10.1007/s11575-016-0301-z
