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Asian Business & Management

, Volume 14, Issue 3, pp 171–193 | Cite as

The cost of distance on subsidiary performance

  • Kevin K Boeh
  • Paul W Beamish
Research Article

Abstract

Using a sample of Japanese–US dyads, we find that the time required to travel between geographically separated locations affects subsidiary performance and survival. Longer travel time harms financial performance, and poor performers face higher closure rates. While distant subsidiaries perform poorly, they also survive longer. This is because remediation attention is focused on easier-to-access subsidiaries, there are increased information processing complexities, and parents more often change managers to address deteriorating performance. Further, distant subsidiaries are more likely to be relocated. By measuring travel time instead of geographic distance, we provide validation for the assumption that there are costs to being geographically distant.

Keywords

distance multinationals foreign direct investment performance survival 

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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2015

Authors and Affiliations

  • Kevin K Boeh
    • 1
  • Paul W Beamish
    • 2
  1. 1.University of Florida, Warrington College of Business AdministrationGainesvilleUSA
  2. 2.Western University, Ivey Business SchoolLondonCanada

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