Rescuing the Industry-Based Competition to Determine the Performance of Foreign Subsidiaries in the Brazilian Host Market

Abstract

This panel study examines the influence of the industry-based competition factor on the performance of 399 foreign subsidiaries in the Brazilian host market from 2008 to 2011. Regression analysis was carried out on panel data using weighted least squares as the estimator. The performance of foreign subsidiaries has been significantly influenced in a negative way because of the concentration of the Brazilian host market and the technology intensity level of the sector in which the subsidiaries operate. The subsidiaries should not neglect the criteria of industry-based competition. These firms should develop strategies to position themselves in specific sectors, looking to lower market concentration and lower the level of technological intensity for higher performance. Suggestions for future research are also given.