Subsidiary Types, Activities, and Location: An Empirical Investigation

subsidiaries are “Production Bases”, which seems to be in line with expectations given the lowcost base offered by the region and the huge amounts of FDI into these regions by multinationals.Further, the relatively low number of “Management and Development” subsidiaries may also beexpected as the strategy setting and activities such as R&D may be located at other locations,including the firm’s headquarters.The categorical modeling results indicate that firms of different size have different requirementsof their subsidiaries. In particular, larger firms are more likely to have subsidiaries that span theseveral activities. This implies that larger firms in a sense distribute their important activitiesmore broadly than smaller firms, which by implication retain the more important up-streamactivities such as corporate support, management and R&D at home, or at least in other regionsthan the Asia-Pacific.The lack of significant results for the international experience of the firm (except that of“Production Bases” which has a small negative impact) and the number of subsidiaries a firm hasin the Asia-Pacific region is surprising. One might expect that firms with different levels ofinternational experience would have different profiles across their subsidiaries. Similarly, onemight expect that firms with more subsidiaries in the Asia-Pacific might place their activities inthe region differently from firms with only a few subsidiaries in the region. One reason for theseresults might be insufficient variance in the two explanatory variables. The mean of theinternational experience variable in the sample is 3.36 out of a possible 4.00. In other words, themethod of identifying multinational firms for the analysis (directories of Chambers of Commerceand similar Corporate Directories) tended to identify firms with a great deal of internationalexperience. Similarly, the mean number of subsidiaries a firm had in the region was 10.05 out ofa possible 12, indicating that the vast majority of firms in the sample had subsidiaries in all ornearly all of the economies in the region. Thus even with a large number of firms, there may not25