Determinants of Market Orientation of Foreign Operations in Greece: A Meta-Internationalization Analysis from the Subsidiary Perspective

Abstract

The purpose of this paper is to extent internationalization theories by investigating the potential moderating impact of three common foreign direct investment (FDI) characteristics (years of operation, size and role) on the market orientation of MNE subsidiaries located in Greece. By developing hypotheses based on existing literature, our findings indicate that market-seeking FDI and import substitution strategies correlate with an increased importance for the focal, and those markets which are characterized by geographical proximity and similar structural elements (Balkan countries). Strategic-seeking FDI and subsidiaries' mandate to extent MNEs' original product line mainly targets at supplying integrated economic areas (EU) and global markets. Subsidiaries which are relatively smaller and more recently established tend to focus on more geographically dispersed markets. In the main, the results meet our expectations for a middle-income peripheral European economy, where foreign operations show strong elements of static and immediate competitiveness, but also emerging potentials to upgrade their roles into more sophisticated regional representatives of their respective network.

The effects of institutions and subsidiary competence on the international market orientation in foreign-owned subsidiaries

“…This is because of increasing transaction costs for conducting business in institutionally distant countries (Slangen and Beugelsdijk, 2010). Examples for such additional costs, especially for the importance of international markets for foreign-owned subsidiaries, are additional export taxes, differing health and safety regulations or other necessary product adaptations to comply with the regulatory setting in the host country and beyond (Estrin et al, 2008;Manolopoulos, 2010b). Furthermore, additional costs arise for expansion of subsidiaries into other markets through the liability of foreignness (Zaheer, 1995).…”

“…Of increasing importance in the field is the international market orientation of subsidiaries (Cantwell, 2009;Meyer and Estrin, 2014). International market orientation refers thereby to the importance of markets that the subsidiary supplies to, either internal or external buyers, which are located outside the host country or region (Manolopoulos, 2010b;Nguyen and Rugman, 2014). Catering to international rather than exclusively to host country markets has been linked with subsidiary performance, host country sourcing, MNE and subsidiary competence building or local industrial settings, for example (Cantwell, 2009;Estrin et al, 2008, McDonald et al, 2011Williams, 2009).…”