Foreign subsidiary performance in multinational enterprises: The role of business development capabilities and resource deployment

Abstract

The research on subsidiary capability building highlights the importance of creating new capabilities in host countries while the resource management view emphasises effective resource structuring, bundling, and deployment actions to achieve competitive advantages and value creation. Building upon these theoretical advances, we develop a conceptual framework that examines the direct and combined impacts of subsidiary-level business development capabilities encompassing both product and market development, and resource deployment on the performance of foreign subsidiaries of multinational enterprises. We empirically test this framework using survey data from manufacturing and service subsidiaries, archival data from parent firms, and host country data from public sources. The empirical results support our hypotheses. We discuss the implications of our findings for both theory and practice.