What is it about?

We study the interplay of parent control with firm capabilities and distance. We find that firm capabilities positively affect foreign affiliate performance. Parent control negatively moderates this effect of firm capabilities on performance. It positively moderates the negative effect of distance (partial support).

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Our study is burdened with several methodical limitations, one of them being limited sample size. Thus, its results should be regarded as exploration of the ambiguous effects of parent control, here explored based on the decisions of new MNEs from a mid-range emerging economy from the CEE region. A complementary future analysis would need to shed more light on the antecedents of assuming lower or higher control over foreign operations of new MNEs, by conducting sub-group analysis on larger samples taking into account the length and intensity of international experience, which may play a role in ownership decisions. Further research should reaching out beyond the still limited population of new MNEs from one country in order to capture more variation in both home and host country institutional settings. Further, a study of internalisation decisions could include other entry modes (such as exports) and their performance. Another limitation refers to the predominant use of survey data in measuring the concerned variables. While the intention was to capture managerial perceptions relevant in expansion decisions, the use of secondary data apart from formal institutional distance in future studies will improve the reliability and robustness of the studied performance effects.

Marian Gorynia
Uniwersytet Ekonomiczny w Poznaniu

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This page is a summary of: A double-edged sword? The moderating effects of control on firm capabilities and institutional distance in explaining foreign affiliate performance, International Business Review, August 2017, Elsevier,
DOI: 10.1016/j.ibusrev.2016.12.009.
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