Innovative Knowledge Transfer Patterns of Group-Affiliated Companies: The effects on the Performance of Foreign Subsidiaries

Local sourcing and MNC subsidiary performance: a legitimacy perspective

Purpose

Based on a legitimacy perspective, this study aims to investigate when local sourcing, as a strategic legitimacy action, improves or impairs subsidiary performance. The authors investigate the moderating role of regulatory/normative institutional distance in the relationship between local sourcing and subsidiary performance. Particularly, departing from prior relevant research, the authors reflect on the direction of institutional distance, categorizing it as either upward or downward institutional distance.

Design/methodology/approach

Using Japanese governmental data, this study performs a panel data analysis using a sample of 1,054 Japanese subsidiaries operating in 37 host countries over a 5-year observation period.

Findings

The authors reveal that downward regulatory/normative institutional distance more positively moderates the relationship between local sourcing and subsidiary performance than upward regulatory/normative distance.

Originality/value

There is little research that specifically discusses the performance effects of local sourcing while considering legitimacy concerns. Moreover, the results of analyses of the relationship between local sourcing and subsidiary performance in existing studies are inconsistent, suggesting that it is necessary to identify the boundary conditions under which local sourcing improves or impairs subsidiary performance. To fill these gaps, this study clarifies when local sourcing improves or impairs subsidiary performance based on a legitimacy perspective. The authors’ finding makes a clear contribution to the literature on strategic legitimacy actions and input localization in multinational corporations.

Does a Board Characteristic Moderate the Relationship between CSR Practices and Financial Performance? Evidence from European ESG Firms

This study aims to examine the potential effect that corporate social responsibility practices (CSR) have on financial performance in ESG firms, using the moderating role of board characteristics. To test the moderating effect of the board characteristics in the relationship between CSR practices and financial performance, we applied linear regressions with panel data using the Thomson Reuters ASSET4 database from European countries in analyzing data of 225 listed companies between 2015 and 2019. The results show that board characteristics partially moderate the relationship between CSR practices and financial performance in European ESG firms. In addition, this study indicates that CSR practices affect the firm’s financial performance positively. The study findings appended a new dimension to governance research that could provide policymakers and regulators with a valuable source of information to strengthen governance mechanisms for better financial performance. Previous studies mostly investigate the direct effect of corporate governance on financial performance. A few studies examine the moderating effect of CSR practice. This paper contributes by investigating the moderating effect of governance mechanisms in the ESG context.

Pure structures or ambidextrous configurations? A grounded theory of knowledge-focused organizational design in innovative ventures

Extant literature remains inconclusive with regard to optimal structural designs for sustaining effective knowledge flows, boosting innovativeness, and achieving superior performance in organizations. We contribute to the ongoing debate on formal, informal, and ambidextrous configurations in the specific context of small high-tech innovators. Adopting an inductive approach to theory building, we explore the factors that account for the variation in knowledge-focused designs across sample firms. In our study, innovative ventures rely on pure formal and informal organizational designs but also attempt to mix both, suggesting that gains from ambidexterity are not ubiquitous. Our analysis unveils that the pursuit of a given structural configuration results from a set of operating contingencies and a deliberate managerial effort to align firm idiosyncrasies with desired strategic outcomes. We advance a grounded theory of knowledge-focused organizational design in small high-tech innovators and formulate propositions that may be tested in future inquiries in the field.