Age Dependence in MNC Subsidiary Mortality : The Inverted S-Curve Hypothesis

This study examines age dependence in the mortality of multinational corporations’ (MNCs’) subsidiaries by integrating various “theory fragments” of organizational ecology. Using a “nonmonotonic logic”, we hypothesize an inverted S-curve relationship between subsidiary age and subsidiary mortality. We highlight the needs to redefine the concept of “organizational inertia” based on organizational routines and to give centrality to organizational size for its underlying size-differentiated routines. Accordingly, we hypothesize that the inverted S-curve is moderated by subsidiary size with the curve remaining inverted S-shaped for smaller subsidiaries and changing to inverted U-shaped for large subsidiaries. Empirical tests supported both hypotheses. Results suggest that a nonmonotonic approach can aid in reaching a more conclusive answer about age dependence; and that organizational size serves to harmonize conflicting theoretical predictions and empirical findings