Impacts Of Institutional Distance On Survival Of Foreign Subsidiaries

As China joins the WTO,the internationalization of Chinese enterprises develops rapidly.By the end of 2014,China's ourward foreign direct investment(OFDI)has continued to be the third place in the world.However,in the process of foreign investment,enterprises need to face the high complexity and uncertainty.Therefore,Chinese multinational companies need to go out and survive at the same time.The survival status of the overseas subsidiaries of the enterprises has been influenced by the multi-level factors,including the multimensional distance,the host country industry and environment.In order to understand the function of different levels of factors better,this paper studies the mechanism of influencing the survival of overseas subsidiaries of Chinese multinational corporations,taking institutional theory as the main perspective,in combination with resource basic theory,transaction cost theory and organizational learning theory.At present,the study on the influence of institutional distance on the internationalization of the enterprise is an important research topic in the field of international business but has not yet been well explained,and it has not been studied from the impacts of enterprise ownership system,international market entry mode and the international experience based the institutional theory.At present,most of the research uses the binary selection model,but it cannot analyze overseas subsidiary sustainability,including the characteristics of living conditions and hazard rate of individuals who have survived for some time.In addition,the research situation is mainly suitable for developed countries,and there is less research about the survival of overseas Chinese companies.In this context,this article explains the core issue of the relationship between the institutional distance and overseas subsidiaries survival through the concept definition,theoretical review,literature review,statistical analysis,empirical analysis and discussion of practical results in detail.In particular,firstly this paper focuses on the domestic and foreign literature review of the factors of influencing overseas subsidiaries' survival,particularly institutional distance,enterprise ownership,experience and international market entry mode.Secondly,after data screening,I get3852 samples of 191 parent companies from 2005 to 2014 for a total of 10 years ofoverseas subsidiaries to invest 968 subsidiaries,involving the number of host countries 91 for empirical research.Thirdly,this paper uses the nonparametric estimation method,the Kaplan-Meier product limit estimation method,to analyze the living conditions of overseas subsidiaries in China.The average life expectancy of the whole sample was 4.12 years,and then the average life expectancy of the selected samples was 3.99 years.And the survival rate of the first year,the second year and the ninth year decreased faster than that of other years.Lastly,this paper studied how institutional distance influence subsidiaries survival using the main effect and moderating effect,according to the covariant Cox proportional hazards model.Institutional distance has been divided into two dimensions,the formal distance and the informal distance.In the end,the model passes the setting of the proportional risk model based on Schoenfeld residuals,and finally draws the following conclusions.First,the formal institutional distance has the negative impact on the survival of overseas subsidiaries;second,the informal institutional distance has the negative impact on the survival of overseas subsidiaries.Thirdly,the informal institutional distance has a higher impact on the survival of overseas subsidiaries than formal institutional distance.Fourth,enterprise ownership has a moderating effect on the relationship between the formal institutional distance and the survival of overseas subsidiaries.State-owned enterprises relative to private enterprises,the formal institutional distance to the survival of overseas subsidiaries will be less negative impact.Fifth,the international market entry mode has a moderating effect on the relationship between the informal institutional distance and the survival of overseas subsidiaries.Sixth,the international experience has a moderating effect on the relationship between the informal institutional distance and the survival of overseas subsidiaries.