Institutional distance and subsidiary performance of multilatinas: moderating effects of ownership strategy and government support
DOI:
https://doi.org/10.24023/FutureJournal/2175-5825/2024.v16i1.869Keywords:
Normative institutional distances, Effects of regulatory, Emerging Market Multinational Enterprises, Subsidiaries performance, Government supportAbstract
Purpose: In this article we investigated the effects of regulatory and normative institutional distances on Emerging Market Multinational Enterprises (EMNEs) subsidiaries performance, and the moderating roles of the ownership strategy and the government support.
Design/methodology/approach: We applied fixed-effects regression models for panel data to analyze a sample of 296 subsidiaries of 32 Brazilian EMNEs, from 2006 to 2015.
Findings: We found that institutional distance positively affects subsidiary performance. Although, full ownership, and government support positively affects subsidiary performance, subsidiaries with partial ownership located in more developed and institutionally distant host countries presents superior performance. We also found a positive relationship between government support, regulatory distance, and subsidiary performance. However, the same relationship with normative distance was not statistically relevant.
Originality/value: By analyzing different ways in which the institutional context affects subsidiary performance and different approaches to increasing or mitigating those effects, this study contributes to furthering the understanding of how institutional issues affect EMNEs, and the role of the home country government.
Conclusions: The findings of this study could help policymakers make informed decisions about investments in EMNEs. This is achieved by analyzing the impact of government financial aid on the performance of subsidiaries.
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