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Export intensity of foreign subsidiaries of multinational enterprises: The role of trade finance availability

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Nguyen, Quyen T. K. and Almodóvar Martínez, Paloma (2018) Export intensity of foreign subsidiaries of multinational enterprises: The role of trade finance availability. International Business Review, 27 (1). pp. 231-245. ISSN 0969-5931

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Official URL: http://dx.doi.org/10.1016/j.ibusrev.2017.07.004



Abstract

We examine the relationship between the role of trade finance availability and the export intensity of foreign subsidiaries of multinational enterprises (MNEs). In developing our hypotheses, we draw upon insights derived from “new” internalisation theory (international business literature) and international trade finance (international economics literature). We empirically test these hypotheses using survey data compiled from subsidiary managers in six ASEAN countries, supplemented with host-country level data. We conceptualise, empirically test, and establish that the subsidiary-level capability in combining and utilising internal and external debts is an important subsidiary-specific advantage to support export intensity. We find that subsidiaries employ intra-firm loans from MNE internal capital markets and, to some extent, bank loans from external financial institutions to boost their export intensity. Subsidiaries may have concerns about foreign exchange risks, but the use of appropriate foreign exchange risk management is positively associated with export intensity. We discuss the implications of our findings for theory and practice.


Item Type:Article
Uncontrolled Keywords:Financing subsidiary exports; Subsidiary export intensity; Subsidiary-specific advantages; New internalisation theory
Subjects:Social sciences > Economics > Commerce
Social sciences > Economics > Business enterprises
ID Code:60607
Deposited On:21 May 2020 08:58
Last Modified:21 May 2020 08:58

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