Multinational Networks During Times of Economic Crisis Versus Stability

Zusammenfassung

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From a network view of multinational enterprises, the authors argue that foreign subsidiaries in multinational networks have access to resources in heterogeneous institutional environments, and that by taking advantage of these linkages they can capitalize on the latent flexibility that resides in being part of a multinational network. The authors compare the performance of subsidiaries during times of economic crisis versus stable periods to determine the environments in which intra- and inter-firm organizational linkages matter most. Results indicate that the enhanced flexibility associated with intra- and inter-firm organizational linkages is more likely to increase the performance of subsidiaries operating in crisis rather than economically stable environments.

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Auszug

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Multinational Networks During Times of Economic Crisis Versus Stability

Introduction

International strategy scholars have long attempted to identify the most effective strategies used by multinational enterprises and how they relate to the organizational structure of those firms. Increasing attention has been paid to the competitive advantages of multinational enterprises (MNEs) as networks consisting of parent firms, their cross-border subsidiaries, and other institutions with which different MNE units interact (Nohria/ Ghoshal 1997). This network view identifies two main advantages associated with MNEs. On the one hand, cross-national coordination enables an MNE to exploit location-specific advantages through specialization (Ghoshal 1987). On the other hand, global integration captures synergies derived from economies of scope, scale, and learning (Roth 1992).

Advantages residing in MNE networks have been identified in theory (Ghoshal 1987), in case studies (Bartlett/Ghoshal 1998), and in large-sample empirical studies (Rangan 1998). However, prior studies have focused on the corporate level in either the conceptualization or empirical tests of MNE network advantages. A corporate level analysis necessitates the aggregation of subsidiary level information and makes it difficult to identify the sources of MNE network benefits. We contend that a subsidiary level analysis can provide a better test of MNE network advantages, identify which subsidiaries benefit from MNE networks, and the conditions under which subsidiaries can benefit from multinational linkages.

MNEs and their foreign subsidiaries operate in a variety of host countries. Consideration of host country environmental issues is important to understanding multinational strategy, particularly in the context of emerging economies that are marked by higher volatility. We therefore set out to compare the subsidiary performance implications of MNE networks during times of economic crisis versus stability. The MNE network theory has seldom been applied to this specific economic condition. By doing s...

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