Foreign affiliate performance: an institutional perspective

Abstract

Drawing on the institutional perspective, this paper shows that the performance of foreign affiliates varies greatly in host country and local industry markets where there are a few foreign affiliates, which signal a strong institutional pressure in the markets and that the variation in foreign affiliate performance will be greater in the markets where there are many foreign affiliates, which signal that the institutional pressures give way to the competitive pressures. Our longitudinal analysis of 8,313 affiliates shows that the relative strength of the local industry-level institutional and competitive pressures is stronger than that of the host country-level pressures.