On the Growth of Foreign Affiliates: Multinational Plant Networks, Joint Ventures, and Flexibility

32 Pages Posted: 5 Mar 2008

See all articles by René Belderbos

René Belderbos

University of Leuven (KUL) - Department of Managerial Economics, Strategy and Innovation; Maastricht University - Department of Organization & Strategy

Jianglei Zou

KU Leuven - Faculty of Business and Economics (FEB)

Date Written: 2007

Abstract

We take a flexibility perspective to analyze employment growth in a large sample of Japanese manufacturing affiliates in nine Asian countries during the years leading up and into the Asian financial crisis (1995-1999). We find that joint ventures are less flexible than wholly owned affiliates in responding to changing environmental conditions in the focal country and underperform in high growth environments. Multinational enterprises use the flexibility created by their multinational plant network to adjust affiliate employment in response to labor cost changes in other countries in which they operate plants. However, no evidence was found that the presence of joint ventures in multinational plant networks reduces this network flexibility. Our findings suggest that more research is needed on the heterogeneous responses of multinational enterprises and their affiliates to changing economic environments.

Keywords: Affiliate growth, Cost, Country, Employment, Flexibility, Growth, Joint ventures, Manufacturing, Multinatioinal plant networks, Multinational enterprises, Networks, Research, Responses

Suggested Citation

Belderbos, Rene and Zou, Jianglei, On the Growth of Foreign Affiliates: Multinational Plant Networks, Joint Ventures, and Flexibility (2007). Available at SSRN: https://ssrn.com/abstract=1102086 or http://dx.doi.org/10.2139/ssrn.1102086

Rene Belderbos (Contact Author)

University of Leuven (KUL) - Department of Managerial Economics, Strategy and Innovation ( email )

Naamsestraat 69
Leuven, B-3000
Belgium
+32 16 32 6912 (Phone)
+32 16 32 6732 (Fax)

Maastricht University - Department of Organization & Strategy ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Jianglei Zou

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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