Do World Product Mandates Really Matter?

Abstract

This paper examines whether MNC subsidiaries with world product mandates fared better than non-specialized subsidiaries in the face of Canada-U.S. trade liberalization. Using confidential affiliate-level panel data on 445 Canadian subsidiaries of U.S. MNCs, empirical analysis finds that affiliates with higher levels of R&D and human capital resources grew relatively more when trade was liberalized. However, R&D- and human-capital-intensive affiliates experienced systematically different growth patterns. The findings imply that world product mandates do reduce affiliates' vulnerability to downsizing, and that human capital development and R&D may be equally important in building world product mandates.

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*Susan E. Feinberg is Assistant Professor of International Business at the Robert H. Smith School of Business, University of Maryland. Her research focuses on firm, country and industry determinants of MNCs' location decisions, and the impact of foreign direct investment on domestic industry.

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Feinberg, S. Do World Product Mandates Really Matter?. J Int Bus Stud 31, 155–167 (2000). https://doi.org/10.1057/palgrave.jibs.8490894

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