The influence of competences and institutional distance on the international market orientation in foreign-owned subsidiaries

Abstract

The international market orientation of foreign-owned subsidiaries, defined here as the importance of markets supplied outside their host country, can, and often does, play a vital role for managers as well as policy makers. This paper investigates how multilevel corporate competences and institutional differences stand to influence international market orientation and performance among firms. Our research is based on a survey of subsidiaries located in the mid-range, emerging economy of Taiwan. The results are analysed using SEMPLS method. We found that competences that emerge from the subsidiary itself and competences from multinational enterprise networks serve to enhance; whereas, competences emerging from headquarters’ operations can have an adverse effect on international market orientation. Institutional differences add to the overall complexity through direct and moderating effects. This study indicates that the competence-based view of the firm can be enriched with insights from institutional theory in order to expand our understanding of subsidiary development located in emerging economies and also with their international market orientation in particular.