The Interplay of Mahalanobis Distance and Firm Capabilities on MNC Subsidiary Exits from Host Countries
- Authors
- Kang, Jingoo; Lee, Jeoung Yul; Ghauri, Pervez N.
- Issue Date
- Jun-2017
- Publisher
- SPRINGER HEIDELBERG
- Keywords
- Cross-national distance; Mahalanobis distance; Multinational corporation (MNC); MNC capabilities; Subsidiary exit
- Citation
- MANAGEMENT INTERNATIONAL REVIEW, v.57, no.3, pp.379 - 409
- Journal Title
- MANAGEMENT INTERNATIONAL REVIEW
- Volume
- 57
- Number
- 3
- Start Page
- 379
- End Page
- 409
- URI
- https://scholarworks.bwise.kr/hongik/handle/2020.sw.hongik/5695
- DOI
- 10.1007/s11575-016-0287-6
- ISSN
- 0938-8249
- Abstract
- We examine how the cross-national Mahalanobis distance between home and host countries may affect a multinational corporation subsidiary's exit from its host country by applying a longitudinal Cox proportional hazard model analysis using data from Korean MNCs between 1990 and 2012. Our findings show that increasing cross-national distance is positively related to the likelihood of a subsidiary's exit from the host country for most cross-national distance dimensions, while increasing cross-national distance is negatively related to the likelihood of a subsidiary's exit from the host country for knowledge and global connectedness dimensions. However, the positive relationship between the seven dimensions of cross-national distance and subsidiary exit becomes weaker when the MNC has strong technological and experiential capabilities, while the negative relationship between two dimensions (i.e., knowledge and global connectedness) of cross-national distance and subsidiary exit becomes stronger. Our study contributes to the international business literature by examining the impact of diverse cross-national distance dimensions on subsidiary exit by showing the significance of firm capabilities in overcoming cross-national distance challenges, as well as by finding both a "problem-focused view" and "positive organizational perspective" in the results.
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