Local Density and Foreign Subsidiary Performance

Academy of Management Journal, Forthcoming

42 Pages Posted: 2 Jun 2005

See all articles by Lorraine Eden

Lorraine Eden

Dept of Management, Mays Business School, Texas A&M University ; School of Law, Texas A&M University

Stewart R. Miller

Durham University Business School

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)

Dept of Management, Mays Business School, Texas A&M University ( email )

Dept of MGMT, TAMU 4221
College Station, TX 77843-4221
United States
979-777-3489 (Phone)

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

School of Law, Texas A&M University ( email )

1515 Commerce St.
Fort Worth, TX Tarrant County 76102
United States
9797773489 (Phone)

Stewart R. Miller

Durham University Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom