The Effects of Institutions and Subsidiary Competence on the International Market Orientation in Foreign-Owned Subsidiaries

Abstract

Purpose - – The purpose of this paper is to enhance our understanding on the effects of national and subnational institutions as well as subsidiary competences on the international market orientation in foreign-owned subsidiaries. Design/methodology/approach - – A postal survey has been conducted based on a census-like database of foreign-owned subsidiaries in the Northwest of England. Findings - – The findings show a positive relationship on the international market orientation for subsidiaries with extended competences and strong links to local suppliers, universities and competitors. A negative association has been found concerning formal institutional distance and strong links to local customers and government institutions. Research limitations/implications - – The survey is limited to foreign-owned subsidiaries in the Northwest of England. Practical implications - – This study implies that subsidiary managers need to take national and subnational institutions as well as subsidiary specific competences into consideration when looking for international market expansion. Originality/value - – The originality of this paper lies in the detailed investigation of institutions at the national and subnational level as well as subsidiary competences on the international market orientation in foreign-owned subsidiaries.