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Local Density and Foreign Subsidiary Performance

Academy of Management Journal, Forthcoming

42 Pages Posted: 2 Jun 2005  

Lorraine Eden

Texas A&M University - Department of Management

Stewart R. Miller

University of Texas at San Antonio - Department of Management

Abstract

Local density (the number of firms vying for similar resources in a local environment) has been overlooked in explaining foreign subsidiary performance. This study draws upon the literatures on liability of foreignness and density dependence to examine how local density within the host country affects performance, both directly and indirectly through its effects on market experience and strategic conformity. We find that local density is negatively related to foreign subsidiary performance, and that market experience is less beneficial in high density environments. Strategic conformity enhances performance in low density environments, but adversely affects performance in high density environments.

Keywords: Local density, foreign subsidiary performance, liability of foreignness, market

JEL Classification: D21, D83, D92, F21, F23, G21, L13, L22, L84, R30

Suggested Citation

Eden, Lorraine and Miller, Stewart R., Local Density and Foreign Subsidiary Performance. Academy of Management Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=733843

Lorraine Eden (Contact Author)

Texas A&M University - Department of Management ( email )

415D Wehner Bldg, TAMU 4221
College Station, TX 77843-4221
United States
979-845-4851 (Phone)
979-845-9641 (Fax)

HOME PAGE: http://mays.tamu.edu/mgmt/

Stewart R. Miller

University of Texas at San Antonio - Department of Management ( email )

501 W. Durango
San Antonio, TX 78207
United States

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