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Advantage transfer on location choice and subsidiary performance

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  • Lo, Fang-Yi
  • Lin, Feng-Jyh

Abstract

Multinational enterprises (MNEs) conduct foreign investments by transferring advantages across borders. Such advantages have varying degrees of transferability. This study explores the effect of the location-boundedness of MNEs' advantage on international strategy and subsequent subsidiaries' performance. The empirical analysis draws on a combination of survey data and data from two databases. Using multiple sources avoids common method biases. Regression results show that marketing advantage has a higher degree of location-boundedness than production advantage does. Lower degrees of advantage's location-boundedness have an association with better subsidiary performance. This study extends the resource-based view into international context by examining what kinds of advantage have higher location-boundedness. The study also explores the barriers to international advantage transfer and their influences on MNE strategy.

Suggested Citation

  • Lo, Fang-Yi & Lin, Feng-Jyh, 2015. "Advantage transfer on location choice and subsidiary performance," Journal of Business Research, Elsevier, vol. 68(7), pages 1527-1531.
    • Handle: RePEc:eee:jbrese:v:68:y:2015:i:7:p:1527-1531
    DOI: 10.1016/j.jbusres.2015.01.046
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    3. Lampón, Jesús F. & Cabanelas, Pablo & Carballo-Cruz, Francisco, 2017. "A model for international production relocation: Multinationals' operational flexibility and requirements at production plant level," Journal of Business Research, Elsevier, vol. 77(C), pages 95-101.

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