The Impact of Governance Quality on Subsidiaries’ Performance: A Survey Analysis from Turkey

Abstract

We employ the quality of governance to study the impact of local institutional context on foreign subsidiaries’ performance. We propose and empirically document that local institutional quality has growth-enhancing effects on subsidiary growth. More specifically, we show that political stability, government effectiveness, regulatory quality, and rule of low are positively and significantly related to subsidiaries’ output. Our findings suggest that, apart from resources and market considerations, institutional constructs should be included as influential predictors in the general models investigating subsidiary performance.

Keywords:

• Institutional theory
• quality of governance
• subsidiary performance
• Turkey
• WGI indicators

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

This research paper was funded by the University of Macedonia Research Committee as part of the “Principal Research 2019” funding program..