How Do Emerging Multinational Enterprises Release Subsidiary Initiatives Located in Advanced Economies?

Xiaoming Yang, Sunny Li Sun and Fuming Jiang

Journal of International Management, 2021, vol. 27, issue 1

Abstract: We revisit the relationship between headquarters and subsidiaries under the context of emerging multinational enterprises (EMNEs) and develop a new model for releasing the subsidiary initiative, a significant form of corporate entrepreneurship activities hosted in advanced economies. Drawing upon institutional theory and corporate entrepreneurship theory, we argue that mutual trust between headquarters and subsidiaries serves as a mediating mechanism linking formal institutional distance and subsidiary initiatives. Meanwhile, we propose that communication effectiveness between headquarter and subsidiary plays as a moderator upon such relationships. Communication between the headquarters and the subsidiary positively moderates the relationship from formal institutional distance to trust. A sample including 232 EMNEs with headquarters in China and subsidiaries in advanced economies largely support our model on subsidiary initiative. Our model provides a solution to the global integration-local responsiveness paradox.

Keywords: Subsidiary initiative; Formal institutional distance; Trust; Communication effectiveness; Headquarters-subsidiary relationship (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intman:v:27:y:2021:i:1:s1075425321000168

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DOI: 10.1016/j.intman.2021.100836

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