Host country uncertainty, intra-MNC production shifts, and subsidiary performance

This study examines whether or not production shifts occur among the foreign subsidiaries of multinational corporations (MNCs) under the influence of differing macroeconomic conditions in their host countries. This study compares intra-MNC production shifts under the influence of exchange rate chang...

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Bibliographic Details
Published in:Strategic management journal 2012-11, Vol.33 (11), p.1331-1340
Main Authors: Lee, Seung-Hyun, Song, Sangcheol
Format: Article
Language:English
Subjects:
Capital costs
Case studies
Comparative studies
Currency
Devaluation
Foreign exchange rates
Foreign subsidiaries
Host country
Macroeconomics
Multinational corporations
Multinational enterprises
operational flexibility
Percentage change
Production
Production costs
Production scheduling
production shifts
RESEARCH NOTES AND COMMENTARIES
Sales vector
Sales volume
Subsidiary
Subsidiary companies
uncertainty
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Summary:This study examines whether or not production shifts occur among the foreign subsidiaries of multinational corporations (MNCs) under the influence of differing macroeconomic conditions in their host countries. This study compares intra-MNC production shifts under the influence of exchange rate changes across different host countries. Our findings indicate that the increase of a subsidiary's production at the time of its host country currency depreciation decreases the production of other subsidiaries within the same MNC network. Our empirical evidence also shows that MNC subsidiaries that engage in production shifts with other affiliated subsidiaries command a higher performance.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.1982