The Impact of Cross-National Distance on Survival of Foreign Subsidiaries

Abstract

One aspect that deserves attention and is considered as a basic research objective of international business literature is firm performance (GLAUM; OESTERLE, 2007), which is one of the most important constructs in management research (KIRBY, 2005). Richard et al. (2009) stated that research has used three main firm performance measures: (i) objective measures, including accounting, financial market, sales, and market share; (ii) subjective measures, such as reputation, perception of effectiveness in terms of sales, and market share; (iii) survival -pertinent measurement to researchers and managers alike (DUNNE et al. 1988).Survival has been used to examine how foreign subsidiaries have performed, since other measurements of performance at the subsidiary level are unavailable (GARG;. Thus, survival and financial performance outcomes are closely related (BAKER;

Internationalization of Japanese Business Groups – Literature Review

“…It is found that knowledge distance i.e. integration and knowledge transfers, home-host country knowledge levels and the influence of expatriates in the dissemination and utilization of knowledge have a negative effect on JBG subsidiary survival (Souza and Ogasavara, 2018). Rather counter-intuitively, it is also discovered, that cultural difference in fact promotes JBG subsidiary survival (Souza and Ogasavara, 2018).…”

“…integration and knowledge transfers, home-host country knowledge levels and the influence of expatriates in the dissemination and utilization of knowledge have a negative effect on JBG subsidiary survival (Souza and Ogasavara, 2018). Rather counter-intuitively, it is also discovered, that cultural difference in fact promotes JBG subsidiary survival (Souza and Ogasavara, 2018). While explanations differ on this point, it is reasonable to believe, that when faced with a significant cultural distance, JBG will make a higher level of commitment in terms of learning and knowledge transfer strategies (Belderbos and .…”

“…Belderbos, Ito and Wakasugi, 2008;Zhou and Guillén, 2015;Zhou and Guillen, 2016;Souza and Ogasavara, 2018). High levels of local adaptation in terms of accumulated local experience and dynamic learning abilities is also proven to have a positive impact on JBG performance(Somlev and Hoshino, 2005; Chan, Isobe and Makino, 2008; Kostova, Roth and Dacin, 2008; Souza.Looking at institutional adaptation and JBG subsidiary performance from an expansion strategy point of view, high local adapters with the objective to expand by seeking out markets, assets and resources perform far better than their low adapter counterpart JBG.…”