This study examines various determinants of local responsiveness as perceived by MNE subsidiary managers in a dynamic environment. It proposes and validates three levels of factors affecting responsiveness, including environmental, structural, and organizational. Analysis of data containing 168 MNE subsidiaries in the People’s Republic of China suggests that environmental complexity and business culture peculiarity heighten local responsiveness. Structural factors such as competition intensity, demand heterogeneity, and component localization elevate local responsiveness. A subsidiary’s local market orientation and the strength of its established network with the business community and governmental agencies also propel such responsiveness. Finally, there is a stronger relationship between environmental and industrial factors and responsiveness for firms seeking local market expansion than for those pursuing export growth.
Get full access to this article
View all access options for this article.
References
1.
Aguinis, H. (1995). Statistical power problems with moderated multiple regression in management research. Journal of Management, 21(6), 1141–1158.
2.
Aiken, L. S., & West, S. G. (1991). Multiple regression: testing and interpreting interactions. Newbury Park, CA: Sage.
3.
Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders. Boston, MA: Harvard Business School Press.
4.
Birkinshaw, J. (1996). How multinational subsidiary mandates are gained and lost. Journal of International Business Studies, 27, 467–495.
5.
Birkinshaw, J., Morrison, A., & Hulland, J. (1995). Structural and competitive determinants of a global integration strategy. Strategic Management Journal, 16, 637–655.
6.
Boddewyn, J., & Brewer, T. L. (1994). International business political behavior: new theoretical direction. Academy of Management Review, 19(1), 119–143.
7.
Burt, R. (1997). The contingent value of social capital. Administrative Science Quarterly, 42, 339–365.
8.
Chang, S. J. (1995). International expansion strategy of Japanese firms: capability building through sequential entry. Academy of Management Journal, 38, 383–407.
9.
Chang, S. J., & Singh, H. (2000). Corporate and industry effects on business unit competitive position. Strategic Management Journal, 21, 739–752.
10.
Cohen, J., & Cohen, P. (1983). Applied multiple regression/correlation analysis for the behavioral sciences. Hillsdale, NJ: Lawrence Erlbaum Associates.
11.
Collis, D. J. (1991). A resource-based analysis of global competition: the case of the bearing industry. Strategic Management Journal, 12, 49–68.
12.
Doz, Y., & Prahalad, C. K. (1981). Headquarters influence and strategic control in multinational companies. Sloan Management Review, 22(4), 15–29.
13.
Doz, Y., & Prahalad, C. K. (1991). Managing MNCs: a search for a new paradigm. Strategic Management Journal, 12 (special issue), 145–164.
14.
Dunning, J. H. (1981). International production and the multinational enterprise. London: Allen and Unwin.
15.
Erramilli, M. K. (1991). The experience factor in foreign market entry behavior of service firms. Journal of International Business Studies, 22, 479–502.
16.
Ghoshal, S. (1987). Global strategy: an organizing framework. Strategic Management Journal, 8, 425–440.
17.
Ghoshal, S., & Nohria, N. (1989). Internal differentiation within multinational corporations. Strategic Management Journal, 10, 323–337.
18.
Golden, B. R. (1992). SBU strategy and performance: the moderating effects of the corporate-SBU relationship. Strategic Management Journal, 13, 145–158.
19.
Gomes–Casseres, B. (1990). Firm ownership presences and host government restrictions: an integrated approach. Journal of International Business Studies, 21, 1–21.
20.
Gupta, A. K., & Govindarajan, V. (1991). Knowledge flows and the structure of control within multinational corporations. Academy of Management Review, 16 (4), 768–792.
21.
Harman, H. H. (1967). Modern factor analysis, 2nd edition, Chicago: University of Chicago Press.
22.
Hofstede, G. (1980). Culture’s consequences. Thousand Oaks, CA: Sage.
23.
Huo, Y. P., & Randall, D. M. (1991). Exploring subcultural differences in Hofstede’s value survey: the case of the Chinese. Asia Pacific Journal of Management, 8 (2), 159–173.
24.
Jarillo, J. C., & Martinez, J. I. (1990). Different roles for subsidiaries: the case of multinational corporations in Spain. Strategic Management Journal, 11 (7), 501–512.
25.
Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm: a model of knowledge development and increasing foreign market commitment. Journal of International Business Studies, 8, 23–32.
26.
Johansson, J. K., & Yip, G. S. (1994). Exploiting globalization potential: U. S. and Japanese strategies. Strategic Management Journal, 15, 579–601.
27.
Johnson, J. H. Jr (1995). An empirical analysis of the integration-responsiveness framework: U. S. Construction equipment industry firms in global competition. Journal of International Business Studies, 26 (3), 621–635.
28.
Kim, W. C., Hwang, P., & Burgers, W. P. (1993). Multinational’s diversification and the risk-return trade-off. Strategic Management Journal, 14, 275–286.
29.
Kobrin, S. J. (1991). An empirical analysis of the determinants of global integration. Strategic Management Journal, 12 (Summer), 17–32.
30.
Kogut, B. (1985). Designing global strategies: profiting from operational flexibility. Sloan Management Review, Fall, 27–38.
31.
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19, 411–432.
32.
Levinthal, D. A. (1991). Organizational adaptation and environmental selection-interrelated processes of change. Organization Science, 2, 140–145.
33.
Luo, Y. (1998). Timing of investment and international expansion performance in China. Journal of International Business Studies, 29 (2), 391–408.
34.
Luo, Y., & Peng, M. W. (1999). Learning to compete in a transition economy: experience, environment, and performance. Journal of International Business Studies, 30 (2), 269–296.
35.
Martinez, R. J., & Dacin, M. T. (1999). Effective motives and normative forces: combining transactions costs and institutional logic. Journal of Management, 25 (1), 75–96.
36.
McGee, J. S. (1988). Industrial organization. Englewood Cliffs, NJ: Prentice–Hall.
37.
Miller, K. D. (1992). A framework for integrated risk management in international business. Journal of International Business Studies, 23, 311–331.
38.
Morrison, A. D., & Roth, K. (1992). A taxonomy of business-level strategies in global industries. Strategic Management Journal, 13 (6), 399–417.
39.
Mueller, F. (1994). Societal effect, organizational effect and globalization. Organization Studies, 15 (3), 407–428.
40.
Naughton, B. (1995). Growing out of the plan: Chinese economic reform 1978–1993. New York: Cambridge University Press.
41.
Pan, Y. (1996). Influence on foreign equity ownership level in joint venturers in China. Journal of International Business Studies, 27 (1), 1–26.
42.
Pfeffer, J., and Salancik, G. R. (1978). The external control of organizations: a resource dependence perspective. New York: Harper and Row.
43.
Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: problems and prospects. Journal of Management, 12 (4), 531–544.
44.
Porter, M. E. (1990). The competitive advantage of nations. Harvard Business Review, March-April, 73–93.
45.
Prahalad, C. K. (1975). The strategic process in a multinational corporation. Unpublished doctoral dissertation, Harvard Business School.
46.
Prahalad, C. K., & Doz, Y. (1987). The Multinational mission: balancing local demands and global vision. New York: Free Press.
47.
Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 90, 79–91.
48.
Rawski, T. G. (1994). Chinese industrial reform: accomplishments, prospects and implications. American Economic Review, 84, 271–275.
49.
Root, F. R. (1988). Environmental risks and the bargaining power of multinational corporations. International Trade Journal (Fall), 111–124.
50.
Roth, K., & Morrison, A. J. (1991). An empirical analysis of the integration-responsiveness framework in global industries. Journal of International Business Studies, 21 (4), 541–564.
51.
Roth, K., Schweiger, D., & Morrison, A. J. (1991). Global strategy implementation at the business unit level: operational capabilities and administrative mechanisms. Journal of International Business Studies, 22 (3), 369–402.
52.
Scherer, F. M., & Ross, D. (1990). Industrial market structure and economic performance. Third Edition, Boston, MA: Houghton Mifflin Company.
53.
Sharma, S. R., Durand, M., & Gur–Arie, D. (1981). Identification and analysis of moderator variables. Journal of Marketing Research, 18, 291–300.
54.
Shenkar, O., & Von Glinow, M. A. (1994). Paradoxes of organizational theory and research: using the case of China to illustrate national contingency. Management Science, 40 (1), 56–71.
55.
Sorge, A. (1991). Strategic fit and societal effect: interpreting cross-national comparisons of technology, organization and human resources. Organization Studies, 12 (2), 161–190.
56.
Taggart, J. H. (1998). Strategy shifts in MNC subsidiaries. Strategic Management Journal, 19, 663–681.
57.
Tallman, S. (1991). Strategic management models and resource-based strategies among MNEs in a host market. Strategic Management Journal, 12, 69–82.
58.
Teece, D. J. (1983). Multinational enterprise, internal governance, and industrial organization. The American Economic Review, 75 (2), 233–238.
59.
Venkatraman, N., & Prescott, J. E. (1990). Environment-strategy coalignment: an empirical test of its performance implications. Strategic Management Journal, 11, 1–23.
60.
Williamson, Oliver, E. (1985). The economic institutions of capitalism. New York: Free Press.
61.
Xin, K. R., & Pearce, J. L. (1996). Guanxi: connections as substitute for formal institutional support. Academy of Management Journal, 39, 1641–1658.
62.
Yip, G. S. (1995). Total global strategy. Englewood Cliffs, NJ: Prentice Hall.
