TY - JOUR
T1 - Social trust in subnational regions and foreign subsidiary performance: Evidence from foreign investments in China
AU - Lu, Wenzhen
AU - Shan, Mengmeng
AU - Song, Yuanyang
PY - 2018
Y1 - 2018
N2 - Recent research suggests that subnational regions can explain the variation in foreign subsidiary performance. However, most studies either treat subnational regions as a whole or focus on formal institutions at the subnational level. This study examines how general social trust, an important dimension of informal institutions at the subnational level, affects foreign subsidiary performance. In a sample of 17,886 foreign investments in China in 2012, we find that the level of social trust in subnational regions has a positive effect on the performance of foreign subsidiaries, reducing the liability of outsidership faced by foreign subsidiaries. Our results also show that this positive effect is contingent on local embeddedness of the foreign subsidiaries. Our findings highlight the importance of incorporating informal institutions at the subnational level in examining strategies and strategy outcomes.
AB - Recent research suggests that subnational regions can explain the variation in foreign subsidiary performance. However, most studies either treat subnational regions as a whole or focus on formal institutions at the subnational level. This study examines how general social trust, an important dimension of informal institutions at the subnational level, affects foreign subsidiary performance. In a sample of 17,886 foreign investments in China in 2012, we find that the level of social trust in subnational regions has a positive effect on the performance of foreign subsidiaries, reducing the liability of outsidership faced by foreign subsidiaries. Our results also show that this positive effect is contingent on local embeddedness of the foreign subsidiaries. Our findings highlight the importance of incorporating informal institutions at the subnational level in examining strategies and strategy outcomes.
KW - hierarchical linear modeling
KW - informal institutions
KW - institutional theory
KW - liability of outsidership
KW - social trust
KW - subsidiary performance
KW - hierarchical linear modeling
KW - informal institutions
KW - institutional theory
KW - liability of outsidership
KW - social trust
KW - subsidiary performance
UR - https://www.webofscience.com/api/gateway?GWVersion=2&SrcApp=ceibs_wosapi&SrcAuth=WosAPI&KeyUT=WOS:000450446300007&DestLinkType=FullRecord&DestApp=WOS
U2 - 10.1057/s41267-018-0148-6
DO - 10.1057/s41267-018-0148-6
M3 - Journal
SN - 0047-2506
VL - 49
SP - 761
EP - 773
JO - Journal of International Business Studies
JF - Journal of International Business Studies
IS - 6
ER -