Research Article

Resource Relatedness and Its Effect on the Performance of Parent Firm and Foreign Subsidiary

Rani Kumar
D. Y. Patil University, India
* Corresponding author
DOI icon 10.24018/ejbmr.2021.6.4.998

Read Counter
329

Downloads
346

Citations

Share

Article Sidebar

Submitted 2021-07-27
Published 2021-08-18

Read counter = 329 times

Table of Contents

Article Main Content

The parent-subsidiary relation is attracting increasing academic interest. However, prior studies on the parent-subsidiary relatedness did not clearly demonstrate the effect of resource relatedness between the parent firm and its subsidiaries on the performance of parent and foreign subsidiaries. Building on resource-based and knowledge-based views, we investigated the effect of resource relatedness on the performance of parent firm and foreign subsidiary. We discussed the theoretical foundations and main accomplishments of prior studies. We developed a conceptual framework and hypothesis in order to close the existing research gap in the topic of interest. We claimed that resource relatedness has a positive impact on the performance of foreign subsidiary, while its effect on the performance of the parent firm can be both positive and negative.

Keywords: Firm performance; International business; Relatedness

References

  1. Yang, Y., & Driffield, N. (2012). Multinationality-Performance Relationship: A Meta-analysis. MIR: Management International Review, 52(1), 23–47.
     Google Scholar
  2. Contractor, F. J. (2007). Is international business good for companies? The evolutionary or multi-stage theory of internationalization vs. the transaction cost perspective. Management International Review, 47(3), 453–475.
     Google Scholar
  3. Wernerfelt, B. (1984). A resource‐based view of the firm. Strategic Management Journal, 5(2), 171–180. https://econpapers.repec.org/RePEc:bla:stratm:v:5:y:1984:i:2:p:171-180
     Google Scholar
  4. Tahami, H., Mirzazadeh, A., Arshadi-khamseh, A., & Gholami-Qadikolaei, A., “A periodic review integrated inventory model for buyer’s unidentified protection interval demand distribution,” Cogent Engineering, 3(1), 1206689, 2016.
     Google Scholar
  5. Hitt, M. A., Hoskisson, R. E., & Kim, H. (1997). International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms. The Academy of Management Journal, 40(4), 767–798.
     Google Scholar
  6. Tahami, H., Mirzazadeh, A., & Gholami-Qadikolaei, A., “Simultaneous control on lead time elements and ordering cost for an inflationary inventory-production model with mixture of normal distributions LTD under finite capacity,” RAIRO-Operations Research, vol. 53(4), pp. 1357–1384, 2019.
     Google Scholar
  7. Hamel, G. (1991). Competition for Competence and Inter-Partner Learning Within International Strategic Alliances. Strategic Management Journal, 12, 83–103.
     Google Scholar
  8. Capron, L., Mitchell, W., & Swaminathan, A. (2001). Asset Divestiture Following Horizontal Acquisitions: A Dynamic View. Strategic Management Journal, 22(9), 817–844.
     Google Scholar
  9. Chang, S.-J., & Rosenzweig, P. M. (2001). The Choice of Entry Mode in Sequential Foreign Direct Investment. Strategic Management Journal, 22(8), 747–776.
     Google Scholar
  10. Tahami, H., Rabadi, G., & Haouari, M. (2020). Exact approaches for routing capacitated electric vehicles. Transportation Research Part E: Logistics and Transportation Review, 144, 102126.
     Google Scholar
  11. Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120.
     Google Scholar
  12. Peng, M. W., & Wang, D. Y. (2000). Innovation Capability and Foreign Direct Investment: Toward a Learning Option Perspective. MIR: Management International Review, 40(1), 79–93.
     Google Scholar
  13. Tahami, H., & Fakhravar, H., “Multilevel Reorder Strategy-based Supply Chain Model,” 5th North American Conference on Industrial Engineering and Operations Management (IEOM), Michigan, USA, 2020b
     Google Scholar
  14. Luo, Y. (2003). Market-Seeking MNEs in an Emerging Market: How Parent-Subsidiary Links Shape Overseas Success. Journal of International Business Studies, 34(3), 290–309.
     Google Scholar
  15. Peltokorpi, V. (2015). Corporate Language Proficiency and Reverse Knowledge Transfer in Multinational Corporations: Interactive Effects of Communication Media Richness and Commitment to Headquarters. Journal of International Management, 21(1), 49–62.
     Google Scholar
  16. Björkman, I., Barner-Rasmussen, W., & Li, L. (2004). Managing Knowledge Transfer in MNCs: The Impact of Headquarters Control Mechanisms. Journal of International Business Studies, 35(5), 443–455.
     Google Scholar
  17. Collis, D., Young, D., & Goold, M. (2007). The Size, Structure, and Performance of Corporate Headquarters. Strategic Management Journal, 28(4), 383–405.
     Google Scholar
  18. Egelhoff, W. G. (2010). How the Parent Headquarters Adds Value to an MNC. Management International Review, 50(4), 413–431.
     Google Scholar
  19. Rabbiosi, L. (2011). Subsidiary roles and reverse knowledge transfer: An investigation of the effects of coordination mechanisms. Journal of International Management, 17(2), 97–113.
     Google Scholar
  20. Ambos, T. C., & Birkinshaw, J. (2010). Headquarters’ Attention and Its Effect on Subsidiary Performance. Management International Review, 50(4), 449–469.
     Google Scholar
  21. Gaur, A. S., & Lu, J. W. (2007). Ownership Strategies and Survival of Foreign Subsidiaries: Impacts of Institutional Distance and Experience. Journal of Management, 33(1), 84–110.
     Google Scholar
  22. Dellestrand, H. (2011). Subsidiary embeddedness as a determinant of divisional headquarters involvement in innovation transfer processes. Journal of International Management, 17(3), 229–242.
     Google Scholar
  23. Geleilate, J. M., Magnusson, P., Parente, R., & Alvarado-Vargas, M. (2016). Home Country Institutional Effects on the Multinationality–Performance Relationship: A Comparison Between Emerging and Developed Market Multinationals. Journal of International Management, 22, 380–402.
     Google Scholar
  24. Yahoodik, S., Tahami, H., Unverricht, J., Yamani, Y., Handley, H., & Thompson, D. (2020). Blink Rate as a Measure of Driver Workload during Simulated Driving. Proceedings of the Human Factors and Ergonomics Society Annual Meeting, 64(1), 1825–1828.
     Google Scholar
  25. Tahami, H., & Fakhravar, H., “A Fuzzy Inventory Model Considering Imperfect Quality Items with Receiving Reparative Batch and Order,” European Journal of Engineering and Technology Research, vol. 5(10), pp. 1179–1185, 2020.
     Google Scholar
  26. Tahami, H., & Fakhravar, H. (2020). A fuzzy inventory model considering imperfect quality items with receiving reparative batch and order overlapping. arXiv preprint arXiv:2009.05881.
     Google Scholar