The Effect of Institutional Experience on Foreign Subsidiary Exit: Evidence from the Overseas Subsidiaries of Korean Firms

Drawing upon the perspectives of institutional theory and organizational learning, this study introduces the concept of related institutional experience, investigates its effects on subsidiary exit, and identifies relative depreciation rates of knowledge gained from different types of institutional experience. Based on a dataset of FDIs by South Korean MNEs between 2007 and 2016, the results of the empirical analysis suggest a negative relationship between related institutional experience and subsidiary exit. This study also finds that the relationship between related institutional experience and subsidiary exit differs depending on the amount of international experience. Finally, our findings suggest that knowledge derived from related regulatory experience depreciates faster than knowledge derived from related normative experience.