Legitimacy-building and the performance of post-transition country firms in an advanced economy – a study of Polish subsidiaries in Germany

• Applicants: Professor Dr. Tobias Dauth; Professor Dr. Thomas Steger
• Subject Area: Accounting and Finance
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 465177433

This project aims at exploring the antecedents of legitimacy and performance of post-transition country firms in a more advanced country in terms of economic and institutional environment. While German firms have long invested in Central Eastern Europe, particularly in Poland, the reverse trend is only recent. Thus, relatively little attention has been paid to market entries of Polish firms in Germany, while scholars have concentrated on the emergence of Asian multinational firms and their investments in advanced economies. In fact, the phenomenon of Polish investment in Germany is important for both economies. For Poland, on the one hand, successful market entries in advanced countries can help fostering the competitiveness of national firms, in particular by establishing the operations in more innovation and knowledge-rich context. Germany, on the other hand, aims to attract foreign firms to generate jobs, increase employment on a domestic level and improve the efficiency of the economy. Particularly during economic crisis times, the entry of new entrepreneurial firms may help restructure enterprises facing difficulties. Therefore, the present study shall adopt the logic of institutional theory to address managerial decisions related to upmarket subsidiaries (i.e. foreign subsidiaries located in a more advanced host country as opposed to the home country of the parent firm). In particular, it will focus on the role of subsidiary management teams and their diversity in building up the legitimacy of the subsidiary in its host country context. Also, the project will address the role of local network ties in the legitimacy-building process. Ultimately, the project aims to investigate how these different legitimacy-related aspects translate into the performance of these subsidiaries. These relationships are formalised in a set of nine research hypotheses constituting a structural equation model (SEM) which will be subject to empirical verification.From the perspective of academic advancement, the planned study will not only contribute to the development of knowledge in the discipline of international management and international economics by addressing a number of existing research deficits, but it will also contribute to the transfer of research competences between the research teams.

• DFG Programme: Research Grants
• International Connection: Poland
• Partner Organisation: Narodowe Centrum Nauki (NCN)
• Cooperation Partners: Professorin Dr. Barbara Jankowska; Dr. Lukasz Puslecki; Professor Dr. Piotr Trapczynski