An Analysis And Appliance Of The Business Strategic Theory In A Global Environment

Two competing theories of firm performance have been proposed in the business strategy literature, the industry structure view and the resource-based of the firm. Empirical studies have estimated the relative contribution of industry structure, corporate, and business unit effects to using only single-country data missing from this debate is an international dimension that includes the relative importance of country conditions as a determinant of firm performance. The objective of this article is to fill this void by adding country characteristics to the analysis. Using national data of large multinationals in a single industry, we estimate the relative importance of country characteristics in addition to industry structure, corporate characteristics, and subsidiary strategy as determinants of subsidiary performance by using multiple regression analysis. This analysis also will contribute to the discussion on environmental determinism versus strategic choice. Country and industry characteristics are mainly outside the control of management, whereas corporate characteristics and subsidiary strategy are under management's control. Results show that country characteristics are by far the most important determinant of subsidiary performance, followed by industry structure, subsidiary strategy, and corporate characteristics. The study adopts a more voluntaristic stance, and integrates perspectives from international business and strategic management to propose a resource-based model of global sustainable competitive advantage. A series of hypotheses are presented on the nature...