Abstract
In recent years, studies of multi-national corporations (MNC) have shifted their focus from the perspective of the MNC itself to the perspective of transnational networks, which has resulted in greater recognition of the role and function of MNC subsidiaries. China’s membership of World Trade Organization has offered more opportunities for MNC in China with the consequence that many of their subsidiaries have become international players where subsidiary autonomy is considered an essential competency. World famous MNCs set up subsidiaries in succession to occupy a market share in China. Therefore, it is worthy to study MNCs' Chinese subsidiaries’ behaviour. This quantitative study therefore examined the role and autonomy of MNC subsidiaries in China and their relationship with their parent corporations. This quantitative study analysed the way in which the literature on subsidiary autonomy has evolved and identified determinates of such autonomy. The findings revealed that there are correlations between MNC procedure justice, subsidiary integration, subsidiary local responsiveness, and subsidiary relative capability and their influence on subsidiary autonomy. This suggests that the role of a subsidiary is highly influenced by its position in the MNC network.
Highlights
After 30 years of development under its open door policy, China has gained worldwide recognition for its economic achievements and has been very successful in attracting foreign investments
Hypothesis 1a examines whether the nationality of a subsidiary’s CEO being the same as its multi-national corporations (MNC) positively influences the level of autonomy of the subsidiary and Hypothesis 1b examines whether higher levels of fairness in decision-making MNC positively influence the level of autonomy of a subsidiary
The findings reveal that there are significant relationships between the determinants and subsidiary autonomy
Summary
After 30 years of development under its open door policy, China has gained worldwide recognition for its economic achievements and has been very successful in attracting foreign investments. Deng (2005) cited a report in the Merchants Weekly Journal claiming that MNCs will continue to be an integral part of China’s economic system. Ever since China’s membership of the World Trade Organisation (WTO), regulations and restrictions imposed on many industries have been lifted or relaxed to a great extent, offering more opportunities for MNC enterprises. This has manifested in a growth of subsidiaries operating in China
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