Entrepreneurship and Multinational Subsidiaries’ Performance in an Era of Financial Crisis and Economic Uncertainty

ABSTRACT

Since entrepreneurial foreign investments may act as a catalyst for economic recovery in crisis periods, we examine the influence of entrepreneurship-related variables on the performance of multinational subsidiaries in Greece, in an era of financial recession and high economic uncertainty. Our conceptual foundation identifies in-house technological capabilities, autonomy and strategic mandates as core predictors of subsidiaries’ entrepreneurial aspects. Drawing upon a questionnaire-based survey of 87 foreign firms operating in the focal economy, our findings suggest that subsidiaries’ product mandate role and increased autonomy impacts positively on performance. Surprisingly enough, the performance effect of technology-related variables linked to entrepreneurship seems insignificant.

KEYWORDS:

• Economic uncertainty
• entrepreneurship
• Greece
• product mandates
• subsidiary performance

Notes

In fact, the definition of Product Mandates was mainly developed by Roth and Morrison (1992) and Papanastassiou and Pearce (1999).

The rationale for the use of nonfinancial indicators in performance assessment is due to recent perceptions of so as to capture operational and effectiveness dimensions.

This is mainly due to the fact that performance evaluation is an exceptionally difficult task in subsidiaries’ case. The complexities related to the assessment of subsidiaries’ performance can be mainly categorized in two dimensions: The first relates to the appropriateness of traditional financial measures (e.g., returns on assets, equity, and investments) versus the relevance of indicators of a more qualitative nature (e.g., product development, innovations’ acceptance, and customer satisfaction). The second relates to a range of differentiated objectives subsidiaries are mandated to achieve within MNE groupwide operations (White and Poynter 1984; Jarillo and Martinez 1990; Gupta and Govidarajan 1991; Taggart 1997a). In that sense, short-term performance appraisals (e.g., current market share, volume of sales) may be misleading, since some subsidiaries may be assigned with the enrichment of the group’s overall technological trajectory; contributing in that way to the MNEs’ longer term competitiveness.

Additional information

Notes on contributors

Dimitris Manolopoulos

Dimitris Manolopoulos is an Assistant Professor at the Department of Business Administration at Athens University of Economics and Business. His research interests are in the areas of international business, human resources, and technology management. He also possesses considerable consulting experience in both private firms and public organizations. Dr. Manolopoulos has been published several times in refereed academic journals and he is the author of a monograph exploring the FDI ecosystem in Greece.