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Performance implications of MNE subsidiary federation: Evidence from India

Lookup NU author(s): Dr Mayank SewakORCiD

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Abstract

Building on extant and emerging scholarship on the deepening of MNE operations in a foreign country, we develop the notion of subsidiary federation, viz., a constellation of legally independent majority-owned subsidiaries of a foreign MNE, in a single host country. We posit that subsidiary federation is a reservoir of host country experiences, resources, knowledge, and networks, and allows the parent MNE strategic flexibility in terms of where and how they choose to operate. The sharing of knowledge facilitated by interactions among the managers of affiliated subsidiaries bestows advantages that, we argue, are performance positive for the affiliates. We hypothesize that multiple subsidiaries in a foreign host country is positively associated with corporate level diversity, and that benefits to the affiliates in a subsidiary federation are associated with the size of the federation and with relative geographic location of the affiliates. We test our theory on a sample of foreign MNE subsidiaries in India during the 2000–2013 period and find strong empirical support for our hypotheses. We conclude with avenues for future research.

Publication metadata

Author(s): Sewak M, Sharma A

Publication type: Article

Publication status: Published

Journal: Journal of International Management

Year: 2020

Volume: 26

Issue: 1

Print publication date: 31/03/2020

Online publication date: 31/10/2020

Acceptance date: 16/10/2020

Date deposited: 24/11/2021

ISSN (print): 1075-4253

ISSN (electronic): 1873-0620

Publisher: Elsevier

URL: https://doi.org/10.1016/j.intman.2019.100710

DOI: 10.1016/j.intman.2019.100710

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