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Asia Pacific Journal of Management

07.12.2022

Interfirm trust and subsidiary performance of emerging market multinational enterprises: an examination of contingent factors

verfasst von: Mandi E, Qiyuan Zhang, Kevin Zheng Zhou, Chuang Zhang

Erschienen in: Asia Pacific Journal of Management

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Abstract

Although emerging market multinational enterprises (EMNEs) face substantial liabilities of origin (LoO) that hinder their global expansion, under-researched is whether trust-building with foreign partners in host markets can help them reduce these liabilities and enhance their subsidiary performance. Drawing on the relational exchange view and institutional theory, our study examines how interfirm trust affects EMNEs’ subsidiary performance in host countries, and how this effect is moderated by factors reflecting the regulative, normative, and cognitive institutional pressures that confront EMNEs in host countries. The results from a survey of 146 senior managers of overseas subsidiaries of Chinese multinational enterprises show that interfirm trust is positively related to subsidiary performance, and this positive effect is stronger when host countries’ legal systems are deficient but financial markets are munificent, and when EMNEs partner with state-owned foreign firms or possess rich international experience.

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The correlations between the variables pertaining to the host country institution were typically high, e.g., the correlation coefficient between legal efficiency and financial munificence is 0.47 and the correlation coefficient between protecting minority investors and credit system is 0.49. To mitigate concerns of multicollinearity, we orthogonalized these variables following Jensen and Wang (2018) and Hiatt et al. (2009). Thus, in Table 4, the corresponding correlation coefficients are 0.

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Titel: Interfirm trust and subsidiary performance of emerging market multinational enterprises: an examination of contingent factors
verfasst von: Mandi E
Qiyuan Zhang
Kevin Zheng Zhou
Chuang Zhang
Publikationsdatum: 07.12.2022
Verlag: Springer US
Erschienen in: Asia Pacific Journal of Management
Print ISSN: 0217-4561
Elektronische ISSN: 1572-9958
DOI: https://doi.org/10.1007/s10490-022-09851-8

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