Intra-firm and arm’s length export propensity and intensity of MNE foreign subsidiaries



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Nguyen, Quyen T. K. and Almodóvar Martínez, Paloma and Ziyi, Wei (2022) Intra-firm and arm’s length export propensity and intensity of MNE foreign subsidiaries. Journal of Business Research, 145 . pp. 288-308. ISSN 0148-2963

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In this study, we build upon internalisation theory in the international business literature and international trade finance in the international economics literature to examine how financial capital affects the decision to export (export propensity) and the share of exports over total sales (export intensity) by the foreign subsidiaries of multinational enterprises. We dissect exports into intra-firm exports (exports to sister affiliates and parent firms) and arm’s length exports (exports to third-party external customers), and we focus on the types of capital that can be used for financing exports, namely intra-firm loans and bank loans. We theorise that these two financing sources have different impacts on subsidiary export behaviour. To test our hypotheses, we use a survey dataset of subsidiaries, host-country data, and two-part models. Our findings show that intra-firm loans are positively related to arm’s length export propensity and intensity; however, intra-firm loans have no significant relationship with intra-firm export propensity and export intensity. Additionally, on the one hand, bank loans have a positive impact on the likelihood of subsidiaries becoming arm’s length exporters, but they do not help subsidiaries with arm’s length export intensity. On the other hand, bank loans negatively impact the likelihood of subsidiaries becoming intra-firm exporters; however, once subsidiaries participate in intra-firm exports, bank loans are positively associated with intra-firm export intensity. We discuss the implications of our findings for theory and practice.

Item Type:Article
Uncontrolled Keywords:Financing subsidiary exports; Intra-firm exports; Arm’s length exports; Export propensity; Export intensity.
Subjects:Social sciences > Economics > Industrial management
Social sciences > Economics > Commerce
Social sciences > Economics > World economy
ID Code:72436
Deposited On:23 May 2022 08:53
Last Modified:23 May 2022 11:49

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