Expansion modes of foreign subsidiaries by multinational corporations

Abstract Multinational corporations expand foreign subsidiaries by switching resources from other locations or by scaling up these subsidiaries independently. Although the two options are alternatives, the choice between them and their interactions with each other have not been investigated. This study develops a model that casts these options as alternatives and provides several novel insights. These results help explain paradoxical findings in international strategy research and motivate future empirical studies on the means by which firms expand their foreign subsidiaries.