Local responsiveness strategy of foreign subsidiaries of Chinese multinationals: The impacts of relational-assets, market-seeking FDI, and host country institutional environments

Nguyen, Quyen T. K.; Nguyen, Quyen T.K.; Wei, Ziyi

Abstract

© 2019, The Author(s). 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.

Citation

Nguyen, Q. T. K., Nguyen, Q. T., & Wei, Z. (2020). Local responsiveness strategy of foreign subsidiaries of Chinese multinationals: The impacts of relational-assets, market-seeking FDI, and host country institutional environments. Asia Pacific Journal of Management, 37, 661–692. https://doi.org/10.1007/s10490-019-09655-3

• Journal Article Type: Article
• Acceptance Date: Mar 14, 2019
• Online Publication Date: Jun 4, 2019
• Publication Date: 2020-09
• Deposit Date: Jan 14, 2020
• Publicly Available Date: Jun 5, 2020
• Journal: Asia Pacific Journal of Management
• Print ISSN: 0217-4561
• Electronic ISSN: 1572-9958
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 37
• Pages: 661–692
• DOI: https://doi.org/10.1007/s10490-019-09655-3
• Keywords: Subsidiary strategy; Local responsiveness; relational assets (R-assets); market seeking; Institution-based view
• Public URL: https://nottingham-repository.worktribe.com/output/3725467
• Publisher URL: https://link.springer.com/article/10.1007/s10490-019-09655-3