Natural disasters and MNE internalization: Reoptimizing subsidiary governance

https://doi.org/10.1016/j.jwb.2022.101387Get rights and content
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Abstract

Natural disasters pose significant threats to MNEs and their subsidiaries. We evaluate the impact and temporal significance of unsystematic disasters on MNE governance decisions. Focusing on JVs and drawing upon new internalization theory, we assess the significance of parent-subsidiary characteristics and experience after a disaster. Our dataset encompasses 7,938 disaster events across 132 countries affecting 5,375 Japanese MNEs and 20,053 subsidiaries over 26 years. We demonstrate the negative impact of disasters on JV survival and observe acquisition (exit) following a disaster based on higher (lower) levels of asset specificity, relative importance, and country and disaster specific experience.

Keywords

Natural disasters
MNEs
New internalization theory
Subsidiary stability
Joint Ventures

Data availability

  • The authors do not have permission to share data.

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