Business Commons^™

Taking Advantage Of Institutional Weakness? Political Stability And Foreign Subsidiary Survival In Primary Industries, Nathaniel C. Lupton, Donya Behnam, Alfredo Jiménez

Faculty Publications

Purpose

This paper aims to investigate the extent to which locating primary industry subsidiaries in politically unstable countries impacts their survival. The authors argue that foreign multinational enterprises in less stable political environments can shape policies that are impactful on the costs of operating in primary industries and avoid compliance with more stringent policies at home.

Design/methodology/approach

Using a sample of 753 primary sector investments of Japanese multinational enterprises during the period 1986 to 2013, the authors conduct a parametric survival analysis of the relationship between political stability and subsidiary survival.

Findings

Political instability has a slight, curvilinear relationship with …