Abstract
This study empirically examines how social control and bureaucratic control may affect the subsidiary performance and how these two controls may interact with each other. Analyzing by ordinal logit regression Taiwanese 907 FDI cases in China from 2011 to 2012, this study finds that the social control via expatriation delivers an inverted sigmoid effect on the subsidiary performance whereas the bureaucratic control via structure- embedded routines delivers an inverted U-shape effect. Besides, the social and the bureaucratic controls are in a conflicting position in which one will offset the positive effect on the subsidiary performance from the other. These findings provide empirical evidences to the international management theory regarding the effect of control mechanism on the subsidiary performance. Besides, these findings suggest practitioners to maintain the optimal balance between social control and bureaucratic control while adopting them to govern subsidiaries.
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