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The Role of Subsidiary Learning Behavior and Absorptive Capacity in Foreign Subsidiary Expansion

Park, Hyeyoun and Chung, Chris C. (2019) The Role of Subsidiary Learning Behavior and Absorptive Capacity in Foreign Subsidiary Expansion International Business Review, 28 (4). pp685-695.

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Abstract

We examine how subsidiaries can implement business expansion successfully to capitalize on growth potentials. Building on our baseline hypothesis, which examines the effect of the extent of business expansion on subsidiary divestment, we also identify the boundary condition of the tendency of subsidiary’s learning behavior in foreign expansion. Specifically, we argue that subsidiaries that expand multiple businesses through competence-creating learning behaviors are more likely to be divested due to increasing complexity. We further suggest a remedial condition to offer a viable approach to implement business expansion through competence-creating learning successfully. Based on a sample of 6,040 foreign subsidiaries operating over 14 years, we show that affiliates are more likely to expand into unfamiliar business domains successfully if they have operated a wider scope of business domains.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
NameEmailORCID
Park, Hyeyounhy.park@surrey.ac.uk
Chung, Chris C.
Date : 13 February 2019
DOI : 10.1016/j.ibusrev.2019.01.006
Copyright Disclaimer : © 2019. Elsevier Ltd. All rights reserved.
Uncontrolled Keywords : Subsidiary business expansion; Competence-creating learning behaviour; Absorptive capacity; Subsidiary divestment
Depositing User : Charlene King
Date Deposited : 13 Mar 2019 09:59
Last Modified : 21 Oct 2019 13:47
URI: http://epubs.surrey.ac.uk/id/eprint/850718

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