Research On The Influence Of Political Risk On The Survival Of Overseas Subsidiaries

Under the background of economic globalization,a large number of enterprises "go global" to carry out international activities and promote their own internationalization process.By the end of 2020,China had set up about 45,000 subsidiaries in 189 countries and regions around the world,and Chinese enterprises’ outbound investment has achieved rapid growth in both scale and number.However,many foreign subsidiaries that "go out" fail to "go on".Every year,a large number of foreign subsidiaries cannot survive or even withdraw from the local market.Some scholars have discussed the main factors affecting the survival of overseas subsidiaries from the aspects of institutional environment,enterprise micro factors and executive background,but few studies have deeply analyzed the influence of political risk on the survival of overseas subsidiaries.First of all,most existing studies focus on the relationship between political risk and market performance or parent company performance,ignoring the impact of political risk on the survival performance of overseas subsidiaries.Secondly,existing studies mostly use binary models to emphasize the survival of enterprises,which is difficult to explain the survival duration of enterprises and data deletion problems.Thirdly,existing researches mostly focus on western developed economies,but lack of researches on developing countries.Finally,the research on the relationship between political risk and transnational enterprise performance failed to reach a unified conclusion,which may be due to the neglect of the adjustment of situational factors.Based on this,this article on the basis of existing research,from the perspective of political risk,combining the theory of foreign direct investment,time compression is not economic theory and the theory of market entry barriers,from 2010 to 2020 are foreign direct investment activities of a-share manufacturing listed overseas subsidiaries of multinational companies as the research object,by Cox proportional hazards model.The relationship between political risk and the survival of overseas subsidiaries was discussed,and the speed of internationalization and investment motivation were further included as moderating variables to specifically explore the moderating effect of the two on the relationship between political risk and the survival of overseas subsidiaries.The findings are as follows: First,political risk negatively affects the survival of overseas subsidiaries,that is,the higher the local political risk,the lower the survival rate of overseas subsidiaries.This conclusion supports the "risk aversion" theory to some extent.Second,the speed of internationalization weakens the adverse impact of political risk on the survival of overseas subsidiaries.When entering host countries and regions with high political risk to carry out investment activities,the speed of internationalization can reduce the adverse impact of political risk through obtaining "first-mover advantage".Third,investment motivation has a moderating effect on the relationship between political risk and the survival of overseas subsidiaries,but the moderating effect is different.Market-seeking and efficiency-seeking investment motives weaken the adverse effects of political risk.The weakening effect of natural resource seeking investment motivation is not obvious.The strategic asset seeking investment motivation strengthens the hindering effect of political risk on the survival of overseas subsidiaries,but the strengthening effect is not significant.Therefore,when enterprises invest in countries and regions with high political risk,they can prioritize market and efficiency to seek for motivation,reduce the hindering effect of risks through communication and cooperation with local areas,enhance their competitiveness,and lay a foundation for the pursuit of "real motivation" in the future.The research of this paper not only enriches the research literature in the field of overseas subsidiary survival and enterprise internationalization from the theoretical level.Also from the practical level to improve the survival rate of overseas subsidiaries to provide reference and reference.It is emphasized that enterprises should combine macro and micro factors and formulate appropriate international development strategies according to local conditions.In addition,in the process of internationalization of enterprises,the government should also give more policy support to enterprises,provide strong guarantee for overseas operation of transnational enterprises,and actively establish information service platform for foreign direct investment.