IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i22p15176-d974083.html
   My bibliography  Save this article

When Digital Capabilities of MNC Subsidiaries Matters: The Moderating Effect of Subsidiary Autonomy in Korea

Author

Listed:
  • Jaehwi Jeong

    (Department of International Trade, Kwangwoon University, Seoul 01897, Korea)

  • Donseung Choi

    (Department of International Trade, Andong National University, Andong 36729, Korea)

  • Jangsoon Kim

    (KU-KIST Graduate School of Converging Science and Technology, Korea University, Seoul 02841, Korea)

Abstract

This study investigates the relationship between digital capabilities and the performance of MNC Korean subsidiaries and the moderating effect of subsidiaries’ autonomy. We examined the effect of digital capabilities of MNC subsidiaries on financial and non-financial performance represented by corporates’ sustainability and the effect of the subsidiary autonomy that controls them. According to the result of the analysis, digital capabilities drive innovation enhancing both financial and non-financial performance of subsidiaries. In addition, it was found that the autonomy of the subsidiary significantly strengthens the positive relationship between the subsidiary’s digital capabilities and financial performance. Instead, the autonomy of the subsidiary does not appear to moderate the effect of the relationship between digital capabilities and non-financial performance significantly. These results suggest that subsidiaries’ digital capabilities improve financial and non-financial performance. In addition, the autonomy of subsidiaries suggests that the digital capabilities of subsidiaries can be a positive factor in the process leading to financial performance.

Suggested Citation

  • Jaehwi Jeong & Donseung Choi & Jangsoon Kim, 2022. "When Digital Capabilities of MNC Subsidiaries Matters: The Moderating Effect of Subsidiary Autonomy in Korea," Sustainability, MDPI, vol. 14(22), pages 1-13, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15176-:d:974083
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/22/15176/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/22/15176/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yadong Luo, 2022. "A general framework of digitization risks in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(2), pages 344-361, March.
    2. Edmans,Alex, 2021. "Grow the Pie," Cambridge Books, Cambridge University Press, number 9781009054676, January.
    3. Alan M. Rugman & Alain Verbeke, 2005. "Subsidiary Specific Advantages in Multinational Enterprises," Chapters, in: Analysis of Multinational Strategic Management, chapter 6, pages 77-90, Edward Elgar Publishing.
    4. Alan M. Rugman & Alain Verbeke, 2005. "Extending the Theory of the Multinational Enterprise: Internalization and Strategic Management Perspectives," Chapters, in: Analysis of Multinational Strategic Management, chapter 7, pages 91-103, Edward Elgar Publishing.
    5. Yadong Luo & Seung H Park, 2004. "Multiparty cooperation and performance in international equity joint ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(2), pages 142-160, March.
    6. Jean-François Hennart, 2019. "Digitalized service multinationals and international business theory," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1388-1400, October.
    7. Guangping Xu & Guangyuan Hou & Jinshan Zhang, 2022. "Digital Sustainable Entrepreneurship: A Digital Capability Perspective through Digital Innovation Orientation for Social and Environmental Value Creation," Sustainability, MDPI, vol. 14(18), pages 1-24, September.
    8. Julian M Birkinshaw & Allen J Morrison, 1995. "Configurations of Strategy and Structure in Subsidiaries of Multinational Structure," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(4), pages 729-753, December.
    9. Yadong Luo & Seung Ho Park, 2004. "Multiparty cooperation and performance in international equity joint ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(4), pages 334-335, July.
    10. Verhoef, Peter C. & Broekhuizen, Thijs & Bart, Yakov & Bhattacharya, Abhi & Qi Dong, John & Fabian, Nicolai & Haenlein, Michael, 2021. "Digital transformation: A multidisciplinary reflection and research agenda," Journal of Business Research, Elsevier, vol. 122(C), pages 889-901.
    11. Verbeke, Alain & Kano, Liena, 2016. "An internalization theory perspective on the global and regional strategies of multinational enterprises," Journal of World Business, Elsevier, vol. 51(1), pages 83-92.
    12. William G Egelhoff, 1991. "Information-Processing Theory and the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(3), pages 341-368, September.
    13. Delyse Springett, 2003. "Business conceptions of sustainable development: a perspective from critical theory," Business Strategy and the Environment, Wiley Blackwell, vol. 12(2), pages 71-86, March.
    14. Xiaoli Wang & Ying Gu & Mahmood Ahmad & Chaokai Xue, 2022. "The Impact of Digital Capability on Manufacturing Company Performance," Sustainability, MDPI, vol. 14(10), pages 1-24, May.
    15. Ajai S Gaur & Chinmay Pattnaik & Deeksha Singh & Jeoung Yul Lee, 2019. "Internalization advantage and subsidiary performance: The role of business group affiliation and host country characteristics," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1253-1282, October.
    16. Yadong Luo, 2006. "Political behavior, social responsibility, and perceived corruption: a structuration perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 747-766, November.
    17. Reihaneh Hajishirzi & Carlos J. Costa & Manuela Aparicio, 2022. "Boosting Sustainability through Digital Transformation’s Domains and Resilience," Sustainability, MDPI, vol. 14(3), pages 1-16, February.
    18. Shih-Fen S Chen, 2005. "Extending internalization theory: a new perspective on international technology transfer and its generalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(2), pages 231-245, March.
    19. Jane W. Lu & Hao Ma & Xuanli Xie, 2022. "Foreignness research in international business: Major streams and future directions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(3), pages 449-480, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Satish Nambisan & Yadong Luo, 2021. "Toward a loose coupling view of digital globalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(8), pages 1646-1663, October.
    2. Danchi Tan & Weichieh Su & Joseph T. Mahoney & Yasemin Kor, 2020. "A review of research on the growth of multinational enterprises: A Penrosean lens," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 498-537, June.
    3. Buckley, Peter & Kandemir, Destan & Liu, Steven Y.H. & Gençtürk, Esra F., 2024. "An internalization perspective on subsidiaries’ reputation and its impact on subsidiaries’ marketing advantage: The moderating roles of resources and autonomy," Journal of Business Research, Elsevier, vol. 175(C).
    4. Rajneesh Narula & Christian Geisler Asmussen & Tailan Chi & Sumit Kumar Kundu, 2019. "Applying and advancing internalization theory: The multinational enterprise in the twenty-first century," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1231-1252, October.
    5. Birgitte Grøgaard & Asmund Rygh & Gabriel R. G. Benito, 2019. "Bringing corporate governance into internalization theory: State ownership and foreign entry strategies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1310-1337, October.
    6. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 0. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-39.
    7. René Bohnsack & Francesca Ciulli & Ans Kolk, 2021. "The role of business models in firm internationalization: An exploration of European electricity firms in the context of the energy transition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(5), pages 824-852, July.
    8. Gorgijevski, Alexander & Holmström Lind, Christine & Lagerström, Katarina, 2019. "Does proactivity matter? the importance of initiative selling tactics for headquarters acceptance of subsidiary initiatives," Journal of International Management, Elsevier, vol. 25(4).
    9. Rahmani, Amir & Aboojafari, Roohallah & Bonyadi Naeini, Ali & Mashayekh, Javad, 2024. "Adoption of digital innovation for resource efficiency and sustainability in the metal industry," Resources Policy, Elsevier, vol. 90(C).
    10. Napier, Elizabeth & Liu, Steven Y.H. & Liu, Jingting, 2024. "Adaptive strength: Unveiling a multilevel dynamic process model for organizational resilience," Journal of Business Research, Elsevier, vol. 171(C).
    11. Luo, Yadong & Maksimov, Vladislav & Bu, Juan, 2021. "Making Geographic Dispersion Work for Emerging Market MNEs," Journal of International Management, Elsevier, vol. 27(3).
    12. Satish Nambisan & Shaker A. Zahra & Yadong Luo, 2019. "Global platforms and ecosystems: Implications for international business theories," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(9), pages 1464-1486, December.
    13. Andrews, Daniel S. & Fainshmidt, Stav & Newburry, William & Parente, Ronaldo & Haensel, Kira, 2023. "What determines subunit integration in the multinational firm? A meta-analysis," Journal of International Management, Elsevier, vol. 29(6).
    14. Feliciano-Cestero, María M. & Ameen, Nisreen & Kotabe, Masaaki & Paul, Justin & Signoret, Mario, 2023. "Is digital transformation threatened? A systematic literature review of the factors influencing firms’ digital transformation and internationalization," Journal of Business Research, Elsevier, vol. 157(C).
    15. Rong (Ratchel) Zeng & Birgitte Grøgaard & Ingmar Björkman, 2023. "Navigating MNE control and coordination: A critical review and directions for future research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(9), pages 1599-1622, December.
    16. Ilgaz Arikan & Ipek Koparan & Asli M Arikan & Oded Shenkar, 2022. "Dynamic capabilities and internationalization of authentic firms: Role of heritage assets, administrative heritage, and signature processes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 601-635, June.
    17. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 2020. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 538-576, June.
    18. Ziyi Wei & Quyen T. K. Nguyen, 2020. "Chinese Service Multinationals: The Degree of Internationalization and Performance," Management International Review, Springer, vol. 60(6), pages 869-908, December.
    19. Yadong Luo, 2022. "A general framework of digitization risks in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(2), pages 344-361, March.
    20. Wu Zhan & Roger Chen & M. Erramilli & Duc Nguyen, 2009. "Acquisition of organizational capabilities and competitive advantage of IJVs in transition economies: The case of Vietnam," Asia Pacific Journal of Management, Springer, vol. 26(2), pages 285-308, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15176-:d:974083. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.