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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2022 Annual Theme: Stakeholder Capitalism
Market-Based Solutions to Vital Economic Issues
Oct 1, 2013

MNC Subsidiary Channel Relationships as Extended Links: Implications of Global Strategies


Foreign subsidiaries of multinational corporations (MNCs) rely on external partners, such as channel partners, to achieve global objectives. We conceptualize the subsidiary’s channel partner as an extended link of the MNC’s internal network: thus, the subsidiary’s adaptation and execution of the MNC’s global strategies should influence the subsidiary’s channel relationship and performance. Building on the strategy–environment alignment framework, we study the influence of MNC global strategies (global efficiency, multinational flexibility, and worldwide learning) on a subsidiary’s channel commitment and the moderating influence of the host-country environment. Survey data from German and Japanese MNCs in the United States indicate the importance of global strategies to a channel relationship. For example, we find that an emphasis on multinational flexibility is detrimental, but worldwide learning benefits the subsidiary’s channel commitment. We also find that the host-country environment plays a contingent role: for example, a global efficiency strategy is beneficial for channel commitment in a stable environment, but detrimental in a dynamic environment. Our research offers key implications for MNCs; we suggest that when MNCs decide to lay emphases on global strategies the MNCs should consider not just their internal subsidiary network, but also their extended channel partner links that function in foreign markets.

Note: Research papers posted on ResearchGate, including any findings, may differ from the final version chosen for publication in academic journals.

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