The impact of governance quality on subsidiaries’ performance: A survey analysis from Turkey

Abstract

We employ the quality of governance to study the impact oflocal institutional context on foreign subsidiaries’ performance. We propose and empirically document that local institutionalquality 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 finding ssuggest that, apart from resources and market considerations, institutional constructs should be included as influential predictorsin the general models investigating subsidiaryperformance.