ABSTRACT
The decision of firms to expand operations into foreign markets is one of the most critical strategic decisions because it involves considerable resource commitments and risks. The industry-based view thus argues that performance of firms varies due to different characteristics across industries. This chapter examines how the institutions of the host country affect the variation of foreign affiliate performance. It analyzes the effects of the level of institutional development of the host countries, and shows how the institutions across subnational regions within host countries affect the variation of foreign affiliate performance. The chapter presents how such institutions interact with the industry, corporate parent, and home country, and how the institutions across supranational regions affect the location choices and performance of multinational corporations. In the context of semiglobalization, the chapter also analyzes the performance consequences of the intra- and inter-regional internationalization. It discusses these problems and provides implications for academics, practitioners, and policymakers as the conclusion.
