Market-seeking MNEs in an emerging market: How parent-subsidiary links shape overseas success

Abstract

This study extends research on parent-subsidiary links, applying new theoretical perspectives - those of resource dependence and dynamic capability - to the new empirical setting of an emerging market. We suggest that parent-subsidiary links help to mitigate emerging market threats by reducing external dependence, and help to capitalize on emerging market opportunities by enhancing local responsiveness. We identify four dimensions (resource commitment, information flow, local responsiveness and control flexibility) to parent-subsidiary links, and examine environmental effects in moderating the contribution of these dimensions. The analysis of 196 Multi National Enterprise (MNE) subsidiaries in China shows that a parent firm's control flexibility, resource commitment and local responsiveness exert a strong and positive influences on subsidiary performance. These influences are weaker when regulatory interference is higher, but stronger when industrial opportunity is richer.