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Interfirm trust and subsidiary performance of emerging market multinational enterprises: an examination of contingent factors

Author

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  • Mandi E

    (Dongbei University of Finance and Economic Dalian)

  • Qiyuan Zhang

    (South China University of Technology)

  • Kevin Zheng Zhou

    (University of Hong Kong)

  • Chuang Zhang

    (Dongbei University of Finance and Economic Dalian)

Abstract

Although emerging market multinational enterprises (EMNEs) face substantial liabilities of origin (LoO) that hinder their global expansion, under-researched is whether trust-building with foreign partners in host markets can help them reduce these liabilities and enhance their subsidiary performance. Drawing on the relational exchange view and institutional theory, our study examines how interfirm trust affects EMNEs’ subsidiary performance in host countries, and how this effect is moderated by factors reflecting the regulative, normative, and cognitive institutional pressures that confront EMNEs in host countries. The results from a survey of 146 senior managers of overseas subsidiaries of Chinese multinational enterprises show that interfirm trust is positively related to subsidiary performance, and this positive effect is stronger when host countries’ legal systems are deficient but financial markets are munificent, and when EMNEs partner with state-owned foreign firms or possess rich international experience.

Suggested Citation

  • Mandi E & Qiyuan Zhang & Kevin Zheng Zhou & Chuang Zhang, 2024. "Interfirm trust and subsidiary performance of emerging market multinational enterprises: an examination of contingent factors," Asia Pacific Journal of Management, Springer, vol. 41(2), pages 583-614, June.
    • Handle: RePEc:kap:asiapa:v:41:y:2024:i:2:d:10.1007_s10490-022-09851-8
    DOI: 10.1007/s10490-022-09851-8
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