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- Title
Local responsiveness strategy of foreign subsidiaries of Chinese multinationals: The impacts of relational-assets, market-seeking FDI, and host country institutional environments.
- Authors
Wei, Ziyi; Nguyen, Quyen T. K.
- Abstract
We build upon the theoretical framework of firm-specific advantages (FSAs) and country-specific advantages (CSAs) to examine the determinants of the local responsiveness strategy of foreign subsidiaries of Chinese multinational enterprises (MNEs). Specifically, we focus on relational assets (R-assets is seen as a unique type of Chinese MNEs' FSA), the market-seeking foreign direct investment (FDI) and host country institutional environments as drivers of the local responsiveness strategy. We empirically test our hypotheses using a survey data of the foreign subsidiaries of Chinese firms together with other secondary data sources. We find that both Chinese MNEs' R-assets and the market-seeking oriented FDI are positively related to subsidiaries' local responsiveness strategy in accommodating local customer needs, government policies, market conditions, and competitive intensity. Moreover, the impact of R-assets in motivating the local responsiveness strategy is stronger in a host country with a weak and underdeveloped institutional environment. While the evidence confirms the existence of the R-assets in influencing subsidiary level strategy, it also casts doubt on such relations-based firm resources in advanced host countries with highly developed institutions.
- Subjects
FOREIGN subsidiaries; INSTITUTIONAL environment; FOREIGN investments; INTERNATIONAL business enterprises; GOVERNMENT policy
- Publication
Asia Pacific Journal of Management, 2020, Vol 37, Issue 3, p661
- ISSN
0217-4561
- Publication type
Article
- DOI
10.1007/s10490-019-09655-3