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Corporate Strategy and Subsidiary Performance: The Effect of Product and Geographic Diversification

Published online by Cambridge University Press:  19 August 2019

Jie Jiao ,
Yang Liu Open the ORCID record for Yang Liu [Opens in a new window] ,
Rui Wu  and
Jun Xia
Jie Jiao
Affiliation:
Tsinghua University, China
Yang Liu
Affiliation:
Cornell University, USA
Rui Wu*
Affiliation:
Tsinghua University, China
Jun Xia
Affiliation:
University of Texas at Dallas, USA
*
Corresponding author: Rui Wu (wur@sem.tsinghua.edu.cn)
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Abstract

In this study, we argue that foreign subsidiaries may benefit from the corporate strategies of multinational enterprises (MNEs) in different ways in terms of knowledge transfer and strategic flexibility. From this viewpoint, we explore the relationship between product diversification and financial performance of their subsidiaries under the condition of MNE geographic diversification. Using panel data on foreign subsidiaries in European countries from 2006 to 2011, we find a U-shaped relationship between product diversification and subsidiary performance and the joint effect of product and geographic diversification. Given the importance of transition economies in international business today, we conducted a subsample test contrasting the results based on the transitional (Central and Eastern European) versus Western European countries. The contrasting results provide important implications for other transition economies like China. We validate the relationship in several ways in our robustness tests.

摘要

摘要

本文提出海外子公司从不同途径获益于跨国企业集团战略中的知识转移和战略灵活性。从这一观点出发，本文探讨跨国企业在地理多元化条件下，其产品多元化与其海外子公司财务绩效之间的关系。基于欧洲国家海外子公司2006至2011年间的面板数据，本文发现产品多元化与子公司绩效之间存在U型关系，而且产品多元化与地理多元化对子公司绩效产生联合影响。基于转型经济在国际商务中的重要性，本文将以上关系在转型（即中欧及东欧）国家与西欧发达国家两个子样本中分别进行检验，子样本的对比结果对于像中国这样的其他转型经济有重要启示。多种稳健性检验进一步支持了以上结论。

Аннотация

АННОТАЦИЯ

В данном исследовании мы утверждаем, что иностранные дочерние компании могут по-разному извлекать выгоду из корпоративных стратегий многонациональных предприятий (МНП) с точки зрения передачи знаний и стратегической гибкости. В этом отношении, мы исследуем взаимосвязь между диверсификацией продуктов и финансовыми показателями дочерних компаний в условиях географической диверсификации МНП. На основании панельных данных из иностранных дочерних компаний в европейских странах за период 2006–2011 годов, мы обнаруживаем U-образную связь между диверсификацией продукции и производственными показателями, а также общее влияние диверсификации продукции и географического положения. Принимая во внимание важность стран с переходной экономикой в международном бизнесе сегодня, мы дополнительно провели сравнительный тест результатов, полученных в странах с переходной экономикой (в Центральной и Восточной Европе) и в странах Западной Европы. Различные результаты имеют важное значение для других стран с переходной экономикой, таких как Китай. Мы проверяем взаимосвязь несколькими способами с помощью тестов на надежность.

Resumen

RESUMEN

En este estudio, discutimos que las filiales extranjeras pueden beneficiarse de las estrategias corporativas de las empresas multinacionales (EMN) de maneras diferentes en términos de transferencia conocimiento y flexibilidad estratégica. Desde este punto de vista, exploramos la relación entre la diversificación de productos y el desempeño financiero de las subsidiarias bajo la condición de diversificación geográfica de las EMN. Usando datos de panel sobre las filiales extranjeras en países europeos entre el 2006 y el 2011, encontramos una relación en forma de U entre la diversificación de diversificación de productos y el desempeño de la filial y el efecto conjunto de la diversificación geográfica y de producto. Dada la importancia de las economías de transición en negocios internacionales hoy, realizamos una prueba de submuestra contrastando los resultados basados en los países de transición (Europa Central y Oriental) versus los países de Europa Occidental. Los resultados contrastantes dan implicaciones importantes para otras economías de transición como China. Validamos la relación de varias maneras en prueba de robustez.

Keywords

foreign subsidiary performancegeographic diversificationproduct diversificationstrategic flexibilitytransition economies海外子公司绩效产品多元化地理多元化战略灵活性转型经济производительность дочерних компаний за рубежомгеографическая диверсификациядиверсификация продукциистратегическая гибкостьстраны с переходной экономикойdesempeño de la filial extranjeradiversificación geográficadiversificación de productoflexibilidad estratégicaeconomías de transición
Type
Article
Information
Management and Organization Review , Volume 16 , Issue 5 , December 2020 , pp. 996 - 1029
Copyright
Copyright © 2019 The International Association for Chinese Management Research

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Footnotes

Accepted by: Senior Editor Thomas Hutzschenreuter

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