The costs of governance in international companies |
| |
| Authors: | Sverre Tomassen Gabriel RG Benito |
| |
| Institution: | 1. School of Business and Economics, Loughborough University, Loughborough, LE11 3TU, United Kingdom;2. Business School, University of Glasgow, Glasgow G12 8QQ, United Kingdom;1. University of Paderborn, Department of International Business, Warburger Strasse 100, 33098 Paderborn, Germany;2. University of Duesseldorf, Faculty of Business Administration and Economics Chair of Management, Universitaetsstrasse 1, 40225 Duesseldorf, Germany;3. University of Giessen, Department of Human Resource Management, Small- and Medium-Sized Enterprises, and Entrepreneurship, Licher Str. 62, 35394 Giessen, Germany;1. Warwick Business School, University of Warwick, Coventry CV4 7AL, UK;2. Queens’ College, University of Cambridge, Cambridge CB3 9ET, UK |
| |
| Abstract: | Using foreign direct investment as a governance mechanism has a cost side that goes beyond mere production and input costs. The governance costs of foreign operations are often vague and underestimated, and sometimes even ignored by companies entering a foreign market. The effects of these costs have also largely been neglected in former empirical research. This study examines the governance cost effects on foreign subsidiary performance. Using data from a survey of 160 Norwegian multinational companies the study shows that there are significant and negative relationships between bargaining, monitoring, and maladaptation costs and subsidiary performance. Conversely, costs incurred due to bonding activities are positively associated with performance. Overall, this study indicates that governance costs play a significant role in explaining the performance of foreign subsidiaries: close to 40% of the variation in performance can be attributed to such costs. Dealing with such costs is hence of utmost importance for the management of multinational companies. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
