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

Ziyi, W. and Nguyen, Q. T. K. (2019) 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. ISSN 1572-9958

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To link to this item DOI: 10.1007/s10490-019-09655-3

Abstract/Summary

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.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > International Business and Strategy
ID Code:82782
Publisher:Springer

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