Lost in Translation or Lost in Your Neighbor's Yard: The Moderating Role of Leverage and Protection Mechanisms for the MNC Subsidiary Technology Sourcing–Performance Relationship

Determinants of foreign-owned subsidiary performance in emerging economies

Purpose

The purpose of this study is to expand our understanding of performance determinants in foreign-owned subsidiaries (FOSs) located in an emerging economy.

Design/methodology/approach

A survey has been conducted of all known FOSs in Taiwan.

Findings

The results show that intra-organisational relationships and subsidiary competences are positively associated with various performance dimensions. Being located in a global city, as well as geographically distant from the home country, seem to have the opposite impact. The moderating factors of subsidiary age and authority are partially relevant.

Research limitations/implications

This study is based on a cross-sectional sample of FOSs in Taiwan.

Practical implications

The study shows that in an emerging market context, being strongly linked with the rest of the multinational enterprises might still be more conducive to subsidiary performance than venturing out. This is an important consideration, given the constant resource constraints for managers.

Practical implications

This study highlights important factors that ought to be taken into consideration by policymakers to attract suitable foreign direct investment.

Originality/value

This study provides a comprehensive test of major performance determinants for FOSs located in an emerging economy.