ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Foreign Ownership and Subsidiary Performance: Impact on Research and Exports?

In the mainstream international management literature the issue of the extent to which multinational corporations achieve the outcomes desired by host country stakeholders is yet to receive the attention it deserves. This paper shows that the contribution of mncs in the form of exports and royalties is significantly lower than that of local firms. Insufficient attention to local subsidiary interests may undermine the motivation of subsidiary managers to discover new sources of advantage for the mncs. It may also discourage subsidiary country governments from offering incentives to mncs for inward foreign direct investment.

Foreign Firms and Local Linkages

Few attempts have been made at addressing the question of how the degree of foreign ownership influences the propensity of firms in developing local linkages. This empirical work shows that contrary to popular belief and host-government intentions, multinational enterprise (MNE) affiliates have fewer linkages with the host-country enterprises vis-a-vis the local enterprises. Host governments need to design creative mechanisms to ensure effective alignment and achievement of both the MNE and host-country objectives.
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