Transformations  in
Business & Economics

The Dark Side of Internationalisation: Dysfunctional Behaviours in Foreign Subsidiaries
Irena Vida, Claude Obadia

ABSTRACT. This study examines foreign subsidiary opportunism as a driver behind international market entry failures of small and medium sized firms. In the empirical part of the study, primary and secondary data from firms that experienced severe problems with a foreign subsidiary are analyzed utilizing qualitative analytical techniques. Various categories and specific types of intra-firm opportunistic behaviours are identified and a classification scheme of foreign subsidiary opportunism is developed. Research findings suggest asset related opportunistic behaviours are the most prevalent type of opportunism in the investigated firms. The analysis of the field data indicate opportunism in a foreign subsidiary may lead to a complete loss of investment in the overseas branch. Managerial implications with respect to how to mitigate dysfunctional practices in foreign subsidiaries are discussed, and recommendations for export development agencies are developed.

KEYWORDS: opportunism, SMEs, integrated entry modes, foreign subsidiary, international market failures.

JEL classification: M10, M21, M31, F23.