AIB 2012 Conference Proceedings - Academy of International ...

TUESDAY
Corruption, Strategy and Foreign Subsidiary Survival
Michael Sartor, University of Western Ontario
This study focuses on the multinational enterprise's (MNE) pursuit of external legitimacy and the survival
implications associated with various strategic initiatives that are implemented at the subsidiary level to secure
legitimacy in increasingly corrupt host market environments. In this context, the strategic insights proffered by
resource dependence theory (RDT) and institutional theory (IT) are characterized by distinct spatial
orientations. RDT predicts that subsidiaries will implement proximal localization strategies in which local (host
country) partners and employees are hypothesized to be best-suited to efforts to enhance the subsidiary's
legitimacy and reduce its likelihood of exit from the host country market. Conversely, IT suggests that distal
localization strategies in which subsidiaries that prefer to engage home country partners and employees in the
subsidiary investment are better-suited to reducing the likelihood of subsidiary exit from increasingly corrupt
host country market environments. We develop a set of competing hypotheses based on RDT and IT to
examine the relationship between host market corruption levels, MNE strategy and the likelihood of exit. The
hypotheses were tested against a large sample of subsidiaries established between 1995 and 2006 in 44 host
countries. Our results reveal the enhanced efficacy of distal localization strategies. Subsidiaries that prefer
transnational joint venture partnership arrangements (constituted by home country partners only), employ a
greater proportion of expatriates and engage fewer host country partners in subsidiary investments enjoy a
diminished likelihood of exit under conditions of heightened corruption. (For more information, please contact:
Michael Sartor, University of Western Ontario, Canada: msartor.phd@ivey.ca)
Session: 3.1.10 - Panel
Track: 13 – Teaching IB
Large-Scale Multi-Country Experiential Learning Projects in IB/IM Education:
Challenges and Best Practices for Enhancing Teaching and Research
Presented On: July 3, 2012 - 09:00-10:15
Chair: Vas Taras, University of North Carolina Greensboro
Panelists:
Vas Taras, University of North Carolina Greensboro
Alexander Bode, Darmstadt University of Technology
Douglas Chun, University of Hawaii at Manoa
Louise Curran, Toulouse Business School
Susan Forquer Gupta, Monmouth University
Josephine Igoe, National University of Ireland, Galway
Peter Magnusson, Florida International University
Riikka Sarala, University of North Carolina, Greensboro
Anja Maria Schuster, Vienna University of Economics and Business
Alfredo Jimenez, University of Burgos
José G. Vargas-Hernández, University of Guadalajara
Norhayati Zakaria, University of Wollongong in Dubai
Xavier Ordenana, ESPAE Graduate School of Management
Betty Jane Punnett, University of the West Indies
Using the X-Culture project as an example, the panel session will review challenges and best practices of using
large-scale multi-country collaborative exercises and simulations to enhance learning in IB/IM courses and
provide a platform for high-quality research. A total of over a thousand students from over two dozen countries
participate in the project every semester. The project is administered by the instructors on a voluntary basis and
participation in the project is complete free for the students and their institutions. The presentations will focus
AIB 2012 Conference Proceedings
Page 198