The effects of market and entrepreneurial orientation on the ambidexterity of multinational companies’ subsidiaries

Abstract

Purpose

This study aims to explore the effect of crises on multinational companies’ (MNC) subsidiaries’ performance. It is hypothesized that crisis-led business underperformance will lead subsidiaries to choose market oriented or entrepreneurial oriented strategies (or both, “ambiorientation”). Finally, this study explores the idea that subsidiaries address market orientation (MO)-based strategies will address both exploration and exploitation outcomes, whereas those that choose entrepreneurial orientation (EO)-based strategies will focus on exploration only.

Design/methodology/approach

Partial-least square structural equation modelling was used to test the hypotheses. Data collection consisted of 280 full answers regarding MNC subsidiaries in Brazil.

Findings

The data provide evidence that crisis perception affects firms’ business performance. MNC subsidiaries in emerging economies, when confronting crises, take two different paths and use both market orientation, as well as entrepreneurial orientation (what the authors call “ambiorientation”). MO-based strategies cause both exploration and exploitation outcomes, and their combined result is comparable to EO-based strategies that focus only on exploration.

Research limitations/implications

Data collection was performed only in MNC subsidiaries in Brazil, and the results may differ depending on the area and the origin of the multinationals. Second, the sample concentrated on industrial activities, where there is space for both exploration and exploitation strategies.

Originality/value

This paper contributes to the literature by discussing the role of crises in shaping the possible strategic reactions multinational companies’ subsidiaries may undertake in emerging countries and their possible outcomes.

Citation

Martins, F.S., Lucato, W.C., Vils, L. and Serra, F.A.R. (2020), "The effects of market and entrepreneurial orientation on the ambidexterity of multinational companies’ subsidiaries", European Business Review, Vol. 32 No. 1, pp. 4-25. https://doi.org/10.1108/EBR-05-2018-0110