We investigate whether MNCs search more globally or locally when restructuring their portfolio of international subsidiaries in response to institutional changes and how complexity in the location portfolio influences this locus of search. Based on previous work, we conceptualize the MNC as a portfolio of location choices that jointly generate value by tightly aligning the activities internally as well as externally. We argue that more negative changes in the institutional environment entice companies to search more broadly, while complexity in the portfolio leads to more local search and positively moderates the negative association between institutional change and global search. We test our hypotheses on a sample of 20,720 restructuring observations and track ownership changes in their affiliates on an annual basis. We find support for our main hypotheses; deteriorations in the institutional environment lead to more global search, while complexity leads to more local search in restructuring activities. Interestingly, the moderating effect of complexity on institutional changes can only be found for companies experiencing institutional deteriorations, where complexity constrains search efforts to more local levels.
3 Sept. 2021
8th WU IB & Finance Virtual Paper Development Workshop
Österreichische Systematik der Wissenschaftszweige (ÖFOS)