Document Type

Conference Proceeding

Publication Date

Spring 2024

Abstract

We investigate the factors influencing the sustainability of subsidiaries and their effective management in host countries over the long term. We explore the impact of subsidiary mandates on longstanding subsidiaries in comparison to younger counterparts, validating our hypotheses through the analysis of data from 1,463 Japanese subsidiaries operating in 26 developing and developed countries. Our findings reveal that efficiency and strategic asset-seeking subsidiaries are more likely to maintain longer operations in the host market. Additionally, we contribute to the literature by applying the resource-based view and institutional theory to promote the longevity of subsidiaries. Our results underscore the necessity of nurturing capabilities within subsidiaries for long-term success and adaptability. Multinational enterprises are encouraged to strategically focus on local market engagement, continuous performance improvement, and effective management of equity partnerships for subsidiary longevity. Overall, our findings suggest that a strategic emphasis on asset utilization, efficiency, and institutional factors can significantly contribute to the longevity of subsidiaries.

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