Page 144 - Ebook HTKH 2024

Accordingly, overviews of scholars on this relationship have been presented in
several review articles: Hitt, Tihanyi, et al., 2006; Cardinal et al., 2011; Hennart, 2011;

Matysiak & Bausch, 2012; Oesterle & Richta, 2013) and meta-analyses (Bausch &
Krist, 2007; Kirca et al., 2011; Kirca, Hult, Deligonul, Perryy, & Cavusgil, 2012; Yang
& Driffield, 2012).
As a result, several firms chose to employ inferior technology as a risk
management solution, leading to lower operation outcome and productivity (North,
1990).
However, very few studies have examined how multiple home country institutions
shape the internationalization and MNE’s performance relationship across many

countries and years. Hence, current findings may not generalize to sets of “different
institutions” and to a broader spectrum of countries (Holmes, Miller, Hitt, & Salmador,
2013).
Besides the moderating role of home and host formal institutions on
internationalzation and performance relationship which the previous scholar proved,
our study focuses on the direct influence of institution distance between home and host

country on MNE subsidiary performance with longitudinal data.
In this paper, we propose that:
H2: Home-host country institutional distance has significant positive impacts
on MNE subsidiary performance within manufacturing industries
2.3. Economic distance

At first, home-host economic distance is denoted by the different economic
development levels between the home market and the host country (Ghemawat, 2001;
Tsang and Yip, 2007). After that, dominant economic distance research focuses on
entry modes, foreign direct investment (FDI), and the survival of MNE subsidiaries in
the host country.
Besides, with the case study method, Zaheer (2002), Tsang & Yip (2007), Xu &
Meyer (2013) conclude that a high level of economic distance provides MNEs with the
benefits of exploiting or exploring competitive advantages. Additionally, high

economic distance brings benefits for those MNE seeking for market, resources and
ownership advantage. Given that they can make optimal use of location advantages
through the ability to access to lower price material and labor cost, avoid high tax barrier
from local government and maximize their benefits of high technology (Dunning, 2000;
Estrin, Bhaumik and Peng 2009a; Goerzen, Asmussen and Nielsen, 2013). Therefore,
in a high host-home economic distance circumstance, such MNE subsidiaries can gain

outstanding performance in the local market and contribute to a new competitive
advantage for the parent firm (Dunning, 2000). Hence, we propose that:
H3: Home-host country economic distance has significant positive impacts on
MNE subsidiary performance within manufacturing industries

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