Social trust in subnational regions and foreign subsidiary performance : Evidence from foreign investments in China

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

62 Scopus Citations
View graph of relations



Original languageEnglish
Pages (from-to)761-773
Journal / PublicationJournal of International Business Studies
Issue number6
Online published12 Apr 2018
Publication statusPublished - Aug 2018
Externally publishedYes



Recent research suggests that subnational regions can explain the variation in foreign subsidiary performance. However, most studies either treat subnational regions as a whole or focus on formal institutions at the subnational level. This study examines how general social trust, an important dimension of informal institutions at the subnational level, affects foreign subsidiary performance. In a sample of 17,886 foreign investments in China in 2012, we find that the level of social trust in subnational regions has a positive effect on the performance of foreign subsidiaries, reducing the liability of outsidership faced by foreign subsidiaries. Our results also show that this positive effect is contingent on local embeddedness of the foreign subsidiaries. Our findings highlight the importance of incorporating informal institutions at the subnational level in examining strategies and strategy outcomes.

Research Area(s)

  • hierarchical linear modeling, informal institutions, institutional theory, liability of outsidership, social trust, subsidiary performance

Citation Format(s)

Download Statistics

No data available