Advantage transfer on location choice and subsidiary performance

Multinational enterprises (MNEs) conduct foreign investments by transferring advantages across borders. Such advantages have varying degrees of transferability. This study explores the effect of the location-boundedness of MNEs' advantage on international strategy and subsequent subsidiaries' performance. The empirical analysis draws on a combination of survey data and data from two databases. Using multiple sources avoids common method biases. Regression results show that marketing advantage has a higher degree of location-boundedness than production advantage does. Lower degrees of advantage's location-boundedness have an association with better subsidiary performance. This study extends the resource-based view into international context by examining what kinds of advantage have higher location-boundedness. The study also explores the barriers to international advantage transfer and their influences on MNE strategy.