IDEAS home Printed from https://ideas.repec.org/a/spr/manint/v53y2013i6d10.1007_s11575-013-0177-0.html
   My bibliography  Save this article

Market Orientation, Embeddedness and the Autonomy and Performance of Multinational Subsidiaries in an Emerging Economy

Author

Listed:
  • Xiaoying Li

    (Brunel University)

  • Xiaming Liu

    (Birkbeck College)

  • Howard Thomas

    (Singapore Management University)

Abstract

This paper develops a conceptual framework for market orientation, embeddedness, autonomy and performance of multinational subsidiaries in an emerging economy. We argue that internal and external embeddedness has different performance implications for export- and local market-oriented multinational subsidiaries. Our results, based on a sample of 233 multinational subsidiaries from China, indicate that while external embeddedness has a positive impact on specialized resources of both types of subsidiary, such resources only positively affect the performance of local market-oriented subsidiaries. By contrast, internal embeddedness has a negative impact on specialized resources of both types of subsidiary. Managerial and policy implications are discussed.

Suggested Citation

  • Xiaoying Li & Xiaming Liu & Howard Thomas, 2013. "Market Orientation, Embeddedness and the Autonomy and Performance of Multinational Subsidiaries in an Emerging Economy," Management International Review, Springer, vol. 53(6), pages 869-897, December.
    • Handle: RePEc:spr:manint:v:53:y:2013:i:6:d:10.1007_s11575-013-0177-0
    DOI: 10.1007/s11575-013-0177-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11575-013-0177-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11575-013-0177-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    2. Mats Forsgren & Ulf Holm & Jan Johanson, 2005. "Managing the Embedded Multinational," Books, Edward Elgar Publishing, number 4000.
    3. Young, Stephen & Tavares, Ana Teresa, 2004. "Centralization and autonomy: back to the future," International Business Review, Elsevier, vol. 13(2), pages 215-237, April.
    4. Taggart, James & Hood, Neil, 1999. "Determinants of autonomy in multinational corporation subsidiaries," European Management Journal, Elsevier, vol. 17(2), pages 226-236, April.
    5. Michael A. Hitt & Haiyang Li & William J. Worthington IV, 2005. "Emerging Markets as Learning Laboratories: Learning Behaviors of Local Firms and Foreign Entrants in Different Institutional Contexts," Management and Organization Review, International Association of Chinese Management Research, vol. 1(3), pages 353-380, November.
    6. Paul Almeida & Anupama Phene, 2004. "Subsidiaries and knowledge creation: the influence of the MNC and host country on innovation," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 847-864, August.
    7. David W. Gerbing & James C. Anderson, 1992. "Monte Carlo Evaluations of Goodness of Fit Indices for Structural Equation Models," Sociological Methods & Research, , vol. 21(2), pages 132-160, November.
    8. Mark Fenton-O'Creevy & Paul Gooderham & Odd Nordhaug, 2008. "Human resource management in US subsidiaries in Europe and Australia: centralisation or autonomy?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(1), pages 151-166, January.
    9. Shige Makino & Andrew Delios, 1996. "Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(5), pages 905-927, December.
    10. Stewart Johnston & Bulent Menguc, 2007. "Subsidiary size and the level of subsidiary autonomy in multinational corporations: a quadratic model investigation of Australian subsidiaries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(5), pages 787-801, September.
    11. Alain Verbeke & Thomas P Kenworthy, 2008. "Multidivisional vs metanational governance of the multinational enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 940-956, September.
    12. Paulo Figueiredo & Klauber Brito, 2011. "The innovation performance of MNE subsidiaries and local embeddedness: evidence from an emerging economy," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 141-165, February.
    13. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    14. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
    15. Lei Li & Zhiang Lin & Bindu Arya, 2008. "The turtle–hare race story revisited: Social capital and resource accumulation for firms from emerging economies," Asia Pacific Journal of Management, Springer, vol. 25(2), pages 251-275, June.
    16. Stephen J. Kobrin, 1991. "An empirical analysis of the determinants of global integration," Strategic Management Journal, Wiley Blackwell, vol. 12(S1), pages 17-31, June.
    17. Carlos Garcia‐Pont & J. Ignacio Canales & Fabrizio Noboa, 2009. "Subsidiary Strategy: The Embeddedness Component," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 182-214, March.
    18. Julian M Birkinshaw & Allen J Morrison, 1995. "Configurations of Strategy and Structure in Subsidiaries of Multinational Structure," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(4), pages 729-753, December.
    19. G. Tomas M. Hult & David J. Ketchen, 2001. "Does market orientation matter?: a test of the relationship between positional advantage and performance," Strategic Management Journal, Wiley Blackwell, vol. 22(9), pages 899-906, September.
    20. Dong Chen & Seung Ho Park & William Newburry, 2009. "Parent contribution and organizational control in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 30(11), pages 1133-1156, November.
    21. Sea-Jin Chang & Arjen van Witteloostuijn & Lorraine Eden, 2010. "From the Editors: Common method variance in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(2), pages 178-184, February.
    22. Hitt, Michael A. & Li, Haiyang & Worthington, William J., 2005. "Emerging Markets as Learning Laboratories: Learning Behaviors of Local Firms and Foreign Entrants in Different Institutional Contexts," Management and Organization Review, Cambridge University Press, vol. 1(3), pages 353-380, November.
    23. Child, John & Rodrigues, Suzana B., 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?1," Management and Organization Review, Cambridge University Press, vol. 1(3), pages 381-410, November.
    24. Mike Wright & Igor Filatotchev & Robert E. Hoskisson & Mike W. Peng, 2005. "Strategy Research in Emerging Economies: Challenging the Conventional Wisdom," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 1-33, January.
    25. Andersson, Ulf & Forsgren, Mats, 1996. "Subsidiary embeddedness and control in the multinational corporation," International Business Review, Elsevier, vol. 5(5), pages 487-508, October.
    26. Birkinshaw, Julian & Hood, Neil & Young, Stephen, 2005. "Subsidiary entrepreneurship, internal and external competitive forces, and subsidiary performance," International Business Review, Elsevier, vol. 14(2), pages 227-248, April.
    27. Julian Birkinshaw & Neil Hood, 2000. "Characteristics of Foreign Subsidiaries in Industry Clusters," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(1), pages 141-154, March.
    28. Michael Z Brooke, 1994. "The Brooke Story: A Professional Half-Life in International Business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(4), pages 667-673, December.
    29. Lecraw, Donald J, 1977. "Direct Investment by Firms from Less Developed Countries," Oxford Economic Papers, Oxford University Press, vol. 29(3), pages 442-457, November.
    30. Cantwell, John & Janne, Odile, 1999. "Technological globalisation and innovative centres: the role of corporate technological leadership and locational hierarchy1," Research Policy, Elsevier, vol. 28(2-3), pages 119-144, March.
    31. Michael A. Hitt & David Ahlstrom & M. Tina Dacin & Edward Levitas & Lilia Svobodina, 2004. "The Institutional Effects on Strategic Alliance Partner Selection in Transition Economies: China vs. Russia," Organization Science, INFORMS, vol. 15(2), pages 173-185, April.
    32. Ulf Andersson & Mats Forsgren & Ulf Holm, 2007. "Balancing subsidiary influence in the federative MNC: a business network view," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(5), pages 802-818, September.
    33. Jindra, Björn & Giroud, Axèle & Scott-Kennel, Joanna, 2009. "Subsidiary roles, vertical linkages and economic development: Lessons from transition economies," Journal of World Business, Elsevier, vol. 44(2), pages 167-179, April.
    34. John M Hannon & Ing-Chung Huang & Bihi-Shiaw Jaw, 1995. "International Human Resource Strategy and Its Determinants: The Case of Subsidiaries in Taiwan," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(3), pages 531-554, September.
    35. Christine M. Chan & Takehiko Isobe & Shige Makino, 2008. "Which country matters? Institutional development and foreign affiliate performance," Strategic Management Journal, Wiley Blackwell, vol. 29(11), pages 1179-1205, November.
    36. John Child & Suzana B. Rodrigues, 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?," Management and Organization Review, International Association of Chinese Management Research, vol. 1(3), pages 381-410, November.
    37. G. Tomas M. Hult & David J. Ketchen & Stanley F. Slater, 2005. "Market orientation and performance: an integration of disparate approaches," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1173-1181, December.
    38. Udo Zander & Bruce Kogut, 1995. "Knowledge and the Speed of the Transfer and Imitation of Organizational Capabilities: An Empirical Test," Organization Science, INFORMS, vol. 6(1), pages 76-92, February.
    39. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    40. Birkinshaw, Julian & Ridderstråle, Jonas, 1999. "Fighting the corporate immune system: a process study of subsidiary initiatives in multinational corporations," International Business Review, Elsevier, vol. 8(2), pages 149-180, April.
    41. Julia Manea & Robert Pearce, 2006. "MNEs’ strategies in Central and Eastern Europe: key elements of subsidiary behaviour," Management International Review, Springer, vol. 46(2), pages 235-255, March.
    42. Andersson, Ulf & Björkman, Ingmar & Forsgren, Mats, 2005. "Managing subsidiary knowledge creation: The effect of control mechanisms on subsidiary local embeddedness," International Business Review, Elsevier, vol. 14(5), pages 521-538, October.
    43. P. M. Bentler & Chih-Ping Chou, 1987. "Practical Issues in Structural Modeling," Sociological Methods & Research, , vol. 16(1), pages 78-117, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hutzschenreuter, Thomas & Harhoff, Philippa-Luisa, 2021. "The accelerating effect of institutional environment unfamiliarity on subsidiary portfolio expansion in a new host country," International Business Review, Elsevier, vol. 30(3).
    2. Ming Pu & Pek-Hooi Soh, 2018. "The role of dual embeddedness and organizational learning in subsidiary development," Asia Pacific Journal of Management, Springer, vol. 35(2), pages 373-397, June.
    3. Tao Bai & Jialin Du & Angelo M. Solarino, 2018. "Performance of foreign subsidiaries “in” and “from” Asia: A review, synthesis and research agenda," Asia Pacific Journal of Management, Springer, vol. 35(3), pages 607-638, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gammelgaard, Jens & McDonald, Frank & Stephan, Andreas & Tüselmann, Heinz & Dörrenbächer, Christoph, 2012. "The impact of increases in subsidiary autonomy and network relationships on performance," International Business Review, Elsevier, vol. 21(6), pages 1158-1172.
    2. de Jong, Gjalt & van Dut, Vo & Jindra, Björn & Marek, Philipp, 2015. "Does country context distance determine subsidiary decision-making autonomy? Theory and evidence from European transition economies," International Business Review, Elsevier, vol. 24(5), pages 874-889.
    3. Achcaoucaou, Fariza & Miravitlles, Paloma & León-Darder, Fidel, 2014. "Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness," International Business Review, Elsevier, vol. 23(1), pages 76-90.
    4. Liu, Xiaming & Vahtera, Pekka & Wang, Chengang & Wang, Jue & Wei, Yingqi, 2017. "The delicate balance: Managing technology adoption and creation in multinational affiliates in an emerging economy," International Business Review, Elsevier, vol. 26(3), pages 515-526.
    5. Carlos Garcia‐Pont & J. Ignacio Canales & Fabrizio Noboa, 2009. "Subsidiary Strategy: The Embeddedness Component," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 182-214, March.
    6. Cavanagh, Andrew & Freeman, Susan & Kalfadellis, Paul & Herbert, Kendall, 2017. "Assigned versus assumed: Towards a contemporary, detailed understanding of subsidiary autonomy," International Business Review, Elsevier, vol. 26(6), pages 1168-1183.
    7. Beugelsdijk, Sjoerd & Jindra, Björn, 2018. "Product innovation and decision-making autonomy in subsidiaries of multinational companies," Journal of World Business, Elsevier, vol. 53(4), pages 529-539.
    8. Chiao, Yu-Ching & Ying, Kung-Pao, 2013. "Network effect and subsidiary autonomy in multinational corporations: An investigation of Taiwanese subsidiaries," International Business Review, Elsevier, vol. 22(4), pages 652-662.
    9. Liu, Xiaohui & Gao, Lan & Lu, Jiangyong & Lioliou, Eleni, 2016. "Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy," Journal of World Business, Elsevier, vol. 51(3), pages 356-368.
    10. Nell, Phillip C. & Andersson, Ulf, 2012. "The complexity of the business network context and its effect on subsidiary relational (over-) embeddedness," International Business Review, Elsevier, vol. 21(6), pages 1087-1098.
    11. Hitt, Michael A. & Li, Dan & Xu, Kai, 2016. "International strategy: From local to global and beyond," Journal of World Business, Elsevier, vol. 51(1), pages 58-73.
    12. Christopher Williams & Juana Du, 2014. "The impact of trust and local learning on the innovative performance of MNE subsidiaries in China," Asia Pacific Journal of Management, Springer, vol. 31(4), pages 973-996, December.
    13. Sidney Costa & Felipe Mendes Borini, 2017. "Global Innovation in Foreign Subsidiaries: The Impact of Entrepreneurial Orientation and Corporate Networks," Brazilian Business Review, Fucape Business School, vol. 14(4), pages 417-434, July.
    14. Dörrenbächer, Christoph & Gammelgaard, Jens, 2010. "Multinational corporations, inter-organizational networks and subsidiary charter removals," Journal of World Business, Elsevier, vol. 45(3), pages 206-216, July.
    15. Heechun Kim & Jie Wu & Douglas A. Schuler & Robert E. Hoskisson, 2020. "Chinese multinationals’ fast internationalization: Financial performance advantage in one region, disadvantage in another," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(7), pages 1076-1106, September.
    16. Patrick Regnér & Udo Zander, 2011. "Knowledge and Strategy Creation in Multinational Companies," Management International Review, Springer, vol. 51(6), pages 821-850, December.
    17. Albis, Nadia & Álvarez, Isabel & García, Aura, 2021. "The impact of external, internal, and dual relational embeddedness on the innovation performance of foreign subsidiaries: Evidence from a developing country," Journal of International Management, Elsevier, vol. 27(4).
    18. Natalie Djodat & Dodo Knyphausen-Aufseß, 2017. "Revisiting Ghoshal and Bartlett’s Theory of the Multinational Corporation as an Interorganizational Network," Management International Review, Springer, vol. 57(3), pages 349-378, June.
    19. Scott-Kennel, Joanna & Saittakari, Iiris, 2020. "Sourcing or sharing in MNE networks? National headquarters and foreign subsidiaries as knowledge conduits in SMOPECs," International Business Review, Elsevier, vol. 29(1).
    20. Ilgaz Arikan & Asli M. Arikan & Oded Shenkar, 2022. "Revisiting emerging market multinational enterprise views: The Goldilocks story restated," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 781-802, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:manint:v:53:y:2013:i:6:d:10.1007_s11575-013-0177-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.