Young Ryeol Park

Effects of international entry‐order strategies on foreign subsidiary exit: The case of Korean chaebols

Purpose – The objective of this paper is to determine whether international entry‐order strategies by Korean chaebols affect the exit of their foreign subsidiaries.Design/methodology/approach – The sample consists of a set of 61 parent firms and their 500 foreign subsidiaries. The sample includes 27 Korean business groups, called chaebols, and spans 51 markets, during the period from 1999 to 2004. The study employs resource‐ and knowledge‐based views, and is based on the Coxs proportional hazard model.Findings – This study leads to two main findings: in the context of Korean business groups, latecomers in international markets have greater survival rates than pioneers do because latecomers have stronger resource commitments; and, nonetheless, if chaebol pioneers have greater competitive advantages than chaebol latecomers, the pioneers subsidiaries have better survival rates than do those of latecomers.Originality/value – The analysis advances order‐of‐entry research by exploring the international order‐...

Location Decision of Korean Manufacturing FDI: A Comparison between Korean Chaebols and Non-Chaebols

Abstract This study analysed the location selection determinants of Korean foreign direct investment (KFDI) from the perspectives of OLI paradigm and resource- and knowledge-based views. The study involved a sample of 1911 Korean multinational enterprises (MNEs) and their 3095 foreign subsidiaries during the period of 1999–2004. Specifically, the study compared the differences of foreign direct investment (FDI) location decisions (1) between less-developed and developed countries (LDCs and DCs) and (2) between chaebols and non-chaebols. The results showed that the partitioned sample model of chaebols versus non-chaebols was found to have more detailed effects on the location decision between the two regions than the combined full sample model. In addition, the results showed that there are clear, effectual differences for subsidiary scale and prior host country experience between chaebols and non-chaebols.

Toward a better understanding of MNEs’ local staffing decision: a multilevel analysis

Purpose – The purpose of this paper is to address the question of how regional diversification affects subsidiary staffing composition in multinational enterprises. Another important objective of this study is to examine the effects of institutional distance, specifically regulative and normative distances, on foreign subsidiary staffing composition. Design/methodology/approach – To estimate firm- and country-level parameters simultaneously, hierarchical linear modeling was conducted on a sample of 1,068 foreign subsidiaries of South Korean firms operating in 25 countries in 2014. Findings – The results reveal that intra-regional diversification has a positive effect, whereas inter-regional diversification has a negative effect on local staffing in foreign subsidiaries. In addition, there is a positive association between informal distance (such as normative distance) and local staffing of foreign subsidiaries, while formal distance (such as regulative distance) is negatively related to local staffing of ...

How the parent–subsidiary relationship encourages subsidiary-driven innovation and performance in Korea: the perspective of subsidiary autonomy

ABSTRACT From the perspective of subsidiary autonomy, this study addresses what affects subsidiary-driven innovation in multinational corporations (MNCs). This study examines this question from three dimensions: (1) top management team (TMT) leadership, (2) knowledge links and (3) organizational size. Our model is tested using a sample of 250 MNC subsidiaries located in Korea. We found that non-expatriate or entrepreneurship-oriented TMT leadership generally enhances subsidiary-driven innovation. We also found that the level of networking with local knowledge sources is associated positively with subsidiary-driven innovation. In addition, the relative size of the subsidiary shows an inverted U-shaped relationship with subsidiary-driven innovation. Finally, the relationship between subsidiary-driven innovation and subsidiary performance is positively moderated by environmental dynamism. The results suggest that as foreign subsidiaries gain autonomy, the likelihood of subsidiary-driven innovation increases.

Do multinational corporations flexibly respond to exchange rate fluctuations? A tale of two Korean MNCs

Purpose – The purpose of this paper is to examine whether Korean multinational corporations (MNCs) in the electronics and steel industries do shift their production across their foreign subsidiaries, located in different countries, as exchange rates fluctuate in foreign countries.Design/methodology/approach – A case study was taken as a qualitative methodology to examine whether MNCs actually shift their production as multinational operational flexibility perspective predicts.Findings – From a case study of two Korean MNCs (LG Electronics and POSCO), it was found that even facing heightened production costs associated with host country currency appreciation, Korean MNCs do not shift their production to less costly locations due to industrial characteristics, limited capacity, and high tariff barriers. It was also found that they reduce the production costs internally and they also negotiate the costs with employees and suppliers to adjust the production costs associated with appreciated currency.Practical...