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Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy

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journal contribution
posted on 05.08.2015, 12:57 by Xiaohui Liu, Lan Gao, Jiangyong Lu, Eleni Lioliou
Despite the fact that multinational enterprises (MNEs) from emerging economies invest actively in host countries with substantial risks, we have limited understanding of how they manage environmental risks to achieve desirable performance in their overseas subsidiaries. Drawing on resource dependence theory, we argue that different localization strategies serve as a mediating mechanism linking environmental risks and overseas subsidiary performance. Our findings based on a sample of Chinese MNEs show that industry risks significantly reduce the levels of input localization and marketing localization of Chinese MNEs’ subsidiaries, and thus negatively affect subsidiary performance. Political risks have an insignificant impact on input localization and marketing localization, but a positive direct impact on Chinese MNEs’ overseas subsidiary performance. We also find that state-owned MNEs’ localization strategies are more sensitive to industry risks compared with privately owned MNEs.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of World Business

Volume

51

Issue

3

Pages

356 - 368

Citation

LIU, X. ... et al, 2016. Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy. Journal of World Business, 51(3), pp. 356–368.

Publisher

© Elsevier

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2015-06-03

Notes

This paper was accepted for publication in the journal Journal of World Business and the definitive published version is available at http://dx.doi.org/10.1016/j.jwb.2015.05.002

ISSN

1090-9516

Language

en