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Export intensity of foreign subsidiaries of multinational enterprises

Nguyen, Q. (2022) Export intensity of foreign subsidiaries of multinational enterprises. Management Decision. ISSN 0025-1747

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To link to this item DOI: 10.1108/MD-07-2021-0874

Abstract/Summary

We contribute to the theory of the multinational enterprise (MNE) by examining subsidiary-specific capability in financial management, defined as the ability to plan, manage, control, and direct financial resources effectively and efficiently, and the perceptions of subsidiary managers on host country financial development as drivers of export intensity (the share of sales that are exported) of MNE foreign subsidiaries. We theorise that subsidiary-level capability in financial management is conceptually a valuable subsidiary-specific advantage and it is as important as other traditional competitive advantages, such as R&D and marketing intensity. Host country financial development is argued to be largely related to the characteristics of the host country-specific advantages. We provide empirical evidence to support for these arguments using a survey dataset of the foreign subsidiaries of Western MNEs together with other public data sources. Our study broadens the understanding of the relationships between subsidiary-specific advantage in financial management, host country specific advantage, and export intensity of MNE foreign subsidiaries. In this way, we make an original contribution to new internalization theory by emphasizing the internal capability building of subsidiaries. We discuss the implications of our findings for MNE foreign subsidiary managers, and policy makers because exporting is critical to the overall strategy of foreign subsidiaries, and it also contributes to the balance of trade and economic development of host countries where foreign subsidiaries operate.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > International Business and Strategy
ID Code:104057
Publisher:Emerald

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