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Risk management, legitimacy, and the overseas subsidiary performance of emerging market MNEs

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  • Han, Xia

Abstract

Multinational enterprises (MNEs) are exposed to substantial risks when operating abroad and effective risk management plays a key role in determining firms’ competitiveness and success in overseas markets. Integrating the notion of home-country government-created advantages with the legitimacy perspective, we look at a concrete manifestation of government-created advantages, the impact of home-country risk-safeguarding mechanisms on Chinese MNEs’ overseas subsidiary performance. Moreover, we examine their effect under the contingency of firms’ legitimacy in host countries. Using survey data, we find that Chinese MNEs’ overseas subsidiary performance is positively associated with the use of home-country risk-safeguarding mechanisms. The strength of this association depends on Chinese firms’ legitimacy in host countries. The low level of legitimacy of these firms with host-country government and business communities can generate a negative spill-over effect that compromises the role of home-country risk-safeguarding mechanisms.

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  • Han, Xia, 2021. "Risk management, legitimacy, and the overseas subsidiary performance of emerging market MNEs," International Business Review, Elsevier, vol. 30(4).
    • Handle: RePEc:eee:iburev:v:30:y:2021:i:4:s0969593120300779
    DOI: 10.1016/j.ibusrev.2020.101732
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