Age Dependence in MNC Subsidiary Mortality: The Inverted S-Curve Hypothesis

37 Pages Posted: 7 Oct 2021

See all articles by George Z. Peng

George Z. Peng

University of Regina - Paul J. Hill School of Business

Paul W. Beamish

University of Western Ontario - Asian Management Institute

Date Written: June 30, 2017

Abstract

This study examines age dependence in the mortality of multinational corporations’ (MNCs’) subsidiaries by integrating various “theory fragments” of organizational ecology. Using a “nonmonotonic logic”, we hypothesize an inverted S-curve relationship between subsidiary age and subsidiary mortality. We highlight the needs to redefine the concept of “organizational inertia” based on organizational routines and to give centrality to organizational size for its underlying size-differentiated routines. Accordingly, we hypothesize that the inverted S-curve is moderated by subsidiary size with the curve remaining inverted S-shaped for smaller subsidiaries and changing to inverted U-shaped for large subsidiaries. Empirical tests supported both hypotheses. Results suggest that a nonmonotonic approach can aid in reaching a more conclusive answer about age dependence; and that organizational size serves to harmonize conflicting theoretical predictions and empirical findings.

Keywords: Age dependence; niche theory; organizational ecology; organizational learning; position theory; structural inertia

JEL Classification: M16

Suggested Citation

Peng, George Z. and Beamish, Paul W., Age Dependence in MNC Subsidiary Mortality: The Inverted S-Curve Hypothesis (June 30, 2017). Available at SSRN: https://ssrn.com/abstract=3920020 or http://dx.doi.org/10.2139/ssrn.3920020

George Z. Peng (Contact Author)

University of Regina - Paul J. Hill School of Business ( email )

3737 Wascana Parkway
Regina
Saskatchewan, S4S 0A2
Canada

Paul W. Beamish

University of Western Ontario - Asian Management Institute ( email )

Richard Ivey School of Business
London, Ontario N6A 3K7
Canada
519-661-3237 (Phone)
519-661-3700 (Fax)

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