IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v34y2025i8p10012-10032.html

Entrepreneurial Orientation, Environmental Dynamism, and Disruptive Sustainability in Emerging Markets: Evidence From MNE Subsidiaries in China

Author

Listed:
  • Shufeng Xiao
  • Taewoo Roh
  • Byung Il Park

Abstract

This study theorizes and empirically examines the relationship between multinational enterprises' (MNEs) entrepreneurial orientation (EO), environmental dynamism (ED), and their pursuit of disruptive sustainability in emerging markets. It also explores the moderating effects of host‐market governmental pressures and liabilities of foreignness (LOF) on these relationships. We test our hypotheses using hierarchical regression analysis on a dataset of 218 MNE manufacturing subsidiaries in China. Given China's growing emphasis on sustainability‐driven economic transformation—reflected in national policies promoting green innovation and environmental governance—MNE subsidiaries face increasing pressure to pursue disruptive sustainability in this dynamic market. The findings reveal that EO and ED positively influence disruptive sustainability, both individually and interactively. Moreover, host‐market governmental pressures and LOF exert distinct moderating effects on these relationships. By integrating two key theoretical concepts (i.e., EO and ED), this study contributes to the literature on disruptive sustainability and responds to calls for a deeper understanding of how MNE subsidiaries can achieve disruptive sustainability in foreign markets.

Suggested Citation

  • Shufeng Xiao & Taewoo Roh & Byung Il Park, 2025. "Entrepreneurial Orientation, Environmental Dynamism, and Disruptive Sustainability in Emerging Markets: Evidence From MNE Subsidiaries in China," Business Strategy and the Environment, Wiley Blackwell, vol. 34(8), pages 10012-10032, December.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:8:p:10012-10032
    DOI: 10.1002/bse.70105
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.70105
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.70105?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
    ---><---

    References listed on IDEAS

    as
    1. Ascani, Andrea & Nair, Lakshmi Balachandran & Iammarino, Simona, 2023. "Racing to the bottom or seeking legitimacy? National environmental performance and the location strategies of Chinese MNEs," Journal of International Management, Elsevier, vol. 29(2).
    2. Christine M. Chan & Shige Makino & Takehiko Isobe, 2010. "Does subnational region matter? Foreign affiliate performance in the United states and China," Strategic Management Journal, Wiley Blackwell, vol. 31(11), pages 1226-1243, November.
    3. R Greg Bell & Igor Filatotchev & Abdul A Rasheed, 2012. "The liability of foreignness in capital markets: Sources and remedies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(2), pages 107-122, February.
    4. Mike W Peng & Denis Y L Wang & Yi Jiang, 2008. "An institution-based view of international business strategy: a focus on emerging economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(5), pages 920-936, July.
    5. Danny Miller & Peter H. Friesen, 1983. "Strategy‐making and environment: The third link," Strategic Management Journal, Wiley Blackwell, vol. 4(3), pages 221-235, July.
    6. Akbar Zaheer & Geoffrey G. Bell, 2005. "Benefiting from network position: firm capabilities, structural holes, and performance," Strategic Management Journal, Wiley Blackwell, vol. 26(9), pages 809-825, September.
    7. Nicolas Petit & David J Teece, 2021. "Innovating Big Tech firms and competition policy: favoring dynamic over static competition [Patterns of industrial innovation]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(5), pages 1168-1198.
    8. Jin, Byoungho Ellie & Shin, Daeun Chloe, 2020. "Changing the game to compete: Innovations in the fashion retail industry from the disruptive business model," Business Horizons, Elsevier, vol. 63(3), pages 301-311.
    9. Tatiana Kostova & Sjoerd Beugelsdijk & W. Richard Scott & Vincent E. Kunst & Chei Hwee Chua & Marc Essen, 2020. "The construct of institutional distance through the lens of different institutional perspectives: Review, analysis, and recommendations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 467-497, June.
    10. Gao, Qiuling & Cui, Lin & Lew, Yong Kyu & Li, Zijie & Khan, Zaheer, 2021. "Business incubators as international knowledge intermediaries: Exploring their role in the internationalization of start-ups from an emerging market," Journal of International Management, Elsevier, vol. 27(4).
    11. Jafar Rezaei & Roland Ortt, 2018. "Entrepreneurial orientation and firm performance: the mediating role of functional performances," Management Research Review, Emerald Group Publishing Limited, vol. 41(7), pages 878-900, May.
    12. Min‐Jae Lee & Anna Pak & Taewoo Roh, 2024. "The interplay of institutional pressures, digitalization capability, environmental, social, and governance strategy, and triple bottom line performance: A moderated mediation model," Business Strategy and the Environment, Wiley Blackwell, vol. 33(6), pages 5247-5268, September.
    13. Xiao, Simon Shufeng & Jeong, Insik & Moon, Jon Jungbien & Chung, Chris Changwha & Chung, Jaiho, 2013. "Internationalization and Performance of Firms in China: Moderating Effects of Governance Structure and the Degree of Centralized Control," Journal of International Management, Elsevier, vol. 19(2), pages 118-137.
    14. Riviere, Monica & Romero-Martínez, Ana M., 2021. "Network embeddedness, headquarters entrepreneurial orientation, and MNE international performance," International Business Review, Elsevier, vol. 30(3).
    15. Engelen, Andreas & Kube, Harald & Schmidt, Susanne & Flatten, Tessa Christina, 2014. "Entrepreneurial orientation in turbulent environments: The moderating role of absorptive capacity," Research Policy, Elsevier, vol. 43(8), pages 1353-1369.
    16. Dubey, Rameshwar & Gunasekaran, Angappa & Childe, Stephen J. & Bryde, David J. & Giannakis, Mihalis & Foropon, Cyril & Roubaud, David & Hazen, Benjamin T., 2020. "Big data analytics and artificial intelligence pathway to operational performance under the effects of entrepreneurial orientation and environmental dynamism: A study of manufacturing organisations," International Journal of Production Economics, Elsevier, vol. 226(C).
    17. Steve Evans & Doroteya Vladimirova & Maria Holgado & Kirsten Van Fossen & Miying Yang & Elisabete A. Silva & Claire Y. Barlow, 2017. "Business Model Innovation for Sustainability: Towards a Unified Perspective for Creation of Sustainable Business Models," Business Strategy and the Environment, Wiley Blackwell, vol. 26(5), pages 597-608, July.
    18. Jafar Rezaei & Roland Ortt, 2018. "Entrepreneurial orientation and firm performance: the mediating role of functional performances," Management Research Review, Emerald Group Publishing Limited, vol. 41(7), pages 878-900, May.
    19. Forstenlechner, Ingo & Mellahi, Kamel, 2011. "Gaining legitimacy through hiring local workforce at a premium: The case of MNEs in the United Arab Emirates," Journal of World Business, Elsevier, vol. 46(4), pages 455-461, October.
    20. Zhang, Jing A. & O'Kane, Conor & Bai, Tao, 2024. "How do university-firm interactions affect firm innovation speed? The case of Chinese science-intensive SMEs," Research Policy, Elsevier, vol. 53(7).
    21. Park, Byung Il & Ghauri, Pervez N., 2015. "Determinants influencing CSR practices in small and medium sized MNE subsidiaries: A stakeholder perspective," Journal of World Business, Elsevier, vol. 50(1), pages 192-204.
    22. Elango, B., 2009. "Minimizing effects of 'liability of foreignness': Response strategies of foreign firms in the United States," Journal of World Business, Elsevier, vol. 44(1), pages 51-62, January.
    23. Zhang, Jing A. & O'Kane, Conor & Chen, Guoquan, 2020. "Business ties, political ties, and innovation performance in Chinese industrial firms: The role of entrepreneurial orientation and environmental dynamism," Journal of Business Research, Elsevier, vol. 121(C), pages 254-267.
    24. Nachiket Bhawe & Shaker A. Zahra, 2019. "Inducing heterogeneity in local entrepreneurial ecosystems: the role of MNEs," Small Business Economics, Springer, vol. 52(2), pages 437-454, February.
    25. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    26. Kivimaa, Paula & Kern, Florian, 2016. "Creative destruction or mere niche support? Innovation policy mixes for sustainability transitions," Research Policy, Elsevier, vol. 45(1), pages 205-217.
    27. Sheng, Margaret L., 2019. "Foreign tacit knowledge and a capabilities perspective on MNEs’ product innovativeness: Examining source-recipient knowledge absorption platforms," International Journal of Information Management, Elsevier, vol. 44(C), pages 154-163.
    28. Eshani Beddewela & Jenny Fairbrass, 2016. "Seeking Legitimacy Through CSR: Institutional Pressures and Corporate Responses of Multinationals in Sri Lanka," Journal of Business Ethics, Springer, vol. 136(3), pages 503-522, July.
    29. Reimann, Felix & Ehrgott, Matthias & Kaufmann, Lutz & Carter, Craig R., 2012. "Local stakeholders and local legitimacy: MNEs' social strategies in emerging economies," Journal of International Management, Elsevier, vol. 18(1), pages 1-17.
    30. Maksimov, Vladislav & Luo, Yadong, 2021. "International springboard as an entrepreneurial act," Journal of World Business, Elsevier, vol. 56(3).
    31. Auh, Seigyoung & Menguc, Bulent, 2005. "Balancing exploration and exploitation: The moderating role of competitive intensity," Journal of Business Research, Elsevier, vol. 58(12), pages 1652-1661, December.
    32. Sanjeev Agarwal & Sridhar N Ramaswami, 1992. "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internationalization Factors," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(1), pages 1-27, March.
    33. Roh, Taewoo & Xiao, Shufeng (Simon) & Park, Byung Il, 2024. "MNEs' capabilities and their sustainable business in emerging markets: Evidence from MNE subsidiaries in China," Journal of International Management, Elsevier, vol. 30(1).
    34. Zahra, Shaker A. & Bogner, William C., 2000. "Technology strategy and software new ventures' performance: Exploring the moderating effect of the competitive environment," Journal of Business Venturing, Elsevier, vol. 15(2), pages 135-173, March.
    35. Castellani, Davide & Marin, Giovanni & Montresor, Sandro & Zanfei, Antonello, 2022. "Greenfield foreign direct investments and regional environmental technologies," Research Policy, Elsevier, vol. 51(1).
    36. Johan Wiklund & DEAN Shepherd, 2003. "Knowledge‐based resources, entrepreneurial orientation, and the performance of small and medium‐sized businesses," Strategic Management Journal, Wiley Blackwell, vol. 24(13), pages 1307-1314, December.
    37. Zhongfeng Su & En Xie & Yuan Li, 2011. "Entrepreneurial Orientation and Firm Performance in New Ventures and Established Firms," Journal of Small Business Management, Taylor & Francis Journals, vol. 49(4), pages 558-577, October.
    38. Grillitsch, Markus & Hansen, Teis & Coenen, Lars & Miörner, Johan & Moodysson, Jerker, 2019. "Innovation policy for system-wide transformation: The case of strategic innovation programmes (SIPs) in Sweden," Research Policy, Elsevier, vol. 48(4), pages 1048-1061.
    39. Vershinina, Natalia & Rodgers, Peter & Tarba, Shlomo & Khan, Zaheer & Stokes, Peter, 2020. "Gaining legitimacy through proactive stakeholder management: The experiences of high-tech women entrepreneurs in Russia," Journal of Business Research, Elsevier, vol. 119(C), pages 111-121.
    40. Gongming Qian & Lee Li & Alan M Rugman, 2013. "Liability of country foreignness and liability of regional foreignness: Their effects on geographic diversification and firm performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(6), pages 635-647, August.
    41. Roy, Abhik & Walters, Peter G. P. & Luk, Sherriff T. K., 2001. "Chinese puzzles and paradoxes: conducting business research in China," Journal of Business Research, Elsevier, vol. 52(2), pages 203-210, May.
    42. Calhoun, Mikelle A., 2002. "Unpacking liability of foreignness: identifying culturally driven external and internal sources of liability for the foreign subsidiary," Journal of International Management, Elsevier, vol. 8(3), pages 301-321.
    Full references (including those not matched with items on IDEAS)

    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. Roh, Taewoo & Xiao, Shufeng (Simon) & Park, Byung Il, 2024. "MNEs' capabilities and their sustainable business in emerging markets: Evidence from MNE subsidiaries in China," Journal of International Management, Elsevier, vol. 30(1).
    2. Purkayastha, Anish & Kumar, Vikas & Gupta, Vishal K., 2021. "Emerging market internationalizing firms: Learning through internationalization to achieve entrepreneurial orientation," Journal of World Business, Elsevier, vol. 56(5).
    3. Irene Chu & Mayank Sewak & Rohit Trivedi, 2024. "Market or Community? An Institutional Logics Interpretation of how MNE Subsidiaries Respond to Mandated Social Innovation in India," Management International Review, Springer, vol. 64(3), pages 459-487, June.
    4. Il Park, Byung & Xiao, Shufeng (Simon), 2021. "Doing good by combating bad in the digital world: Institutional pressures, anti-corruption practices, and competitive implications of MNE foreign subsidiaries," Journal of Business Research, Elsevier, vol. 137(C), pages 194-205.
    5. Jane W. Lu & Hao Ma & Xuanli Xie, 2022. "Foreignness research in international business: Major streams and future directions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(3), pages 449-480, April.
    6. Roh, Taewoo & Xiao, Shufeng & Park, Byung Il & Ghauri, Pervez N., 2025. "Stakeholder pressure, democracy levels, and multinational enterprise corporate social responsibility: Stakeholder and institutional theories," Journal of Business Research, Elsevier, vol. 200(C).
    7. Panicker, Vidya Sukumara & Georgiadou, Elena & Hodgkinson, Ian R., 2024. "Generous to a fault: Differential impact of CSR investments on financial gains in Indian market multinationals," Journal of International Management, Elsevier, vol. 30(3).
    8. Shufeng Xiao & Taewoo Roh & Pervez N. Ghauri & Moon Hwan Cho & Byung Il Park, 2024. "MNCs’ Social Innovation in Emerging Markets: A Stakeholder Perspective," Management International Review, Springer, vol. 64(4), pages 633-670, August.
    9. Stavroula Spyropoulou & Constantine S. Katsikeas & Dionysis Skarmeas & Neil A. Morgan, 2018. "Strategic goal accomplishment in export ventures: the role of capabilities, knowledge, and environment," Journal of the Academy of Marketing Science, Springer, vol. 46(1), pages 109-129, January.
    10. Nadia Zahoor & Huda Khan & Zaheer Khan & Pervaiz Akhtar, 2024. "Responsible innovation in emerging markets’ SMEs: The role of alliance learning and absorptive capacity," Asia Pacific Journal of Management, Springer, vol. 41(3), pages 1175-1209, September.
    11. Purkayastha, Anish & Karna, Amit & Sharma, Sunil & Bhadra, Dhiman, 2024. "Role of resource investment management and strategic resource deployment capabilities in internationalization-performance relationship," Journal of International Management, Elsevier, vol. 30(2).
    12. Anthi Avloniti & Christiana Anaxagorou & Ioanna Stylianou & Duc Khuong Nguyen & Kamila Janovská, 2025. "Global Footprint, Local Imprint: How Institutions and Distance Influence the Corporate Social Performance of Foreign Subsidiaries Across Service Industries," Management International Review, Springer, vol. 65(3), pages 539-589, June.
    13. Chang-Geun Kim & Oh-Suk Yang, 2024. "Global Companies’ Dynamic Response to Business Environment Uncertainty through Digital Transformation: Sustainable Digital Quality–Customer Value–Market Performance Relationships," Sustainability, MDPI, vol. 16(15), pages 1-32, July.
    14. Figueira, Sandra & Gauthier, Caroline & Torres de Oliveira, Rui, 2023. "CSR and stakeholder salience in MNE subsidiaries in emerging markets," International Business Review, Elsevier, vol. 32(5).
    15. Mike W. Peng & Joyce C. Wang & Nishant Kathuria & Jia Shen & Miranda J. Welbourne Eleazar, 2023. "Toward an institution-based paradigm," Asia Pacific Journal of Management, Springer, vol. 40(2), pages 353-382, June.
    16. Ryan W. Tang & Chengli Shu & Kevin Z. Zhou, 2022. "State ownership of Chinese firms and their outward foreign direct investment: Political and economic contingencies," Asia Pacific Journal of Management, Springer, vol. 39(3), pages 1097-1123, September.
    17. Betty Feng, Jing & Liu, Steven Y.H. & Anne Liu, Leigh, 2023. "Cognitive antecedents of EMNEs’ dynamic capabilities: A case study of global identity at Lenovo," Journal of Business Research, Elsevier, vol. 154(C).
    18. Hwan Jin Kim, 2018. "Reconciling Entrepreneurial Orientation and Dynamic Capabilities: A Strategic Entrepreneurship Perspective," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 27(2), pages 180-208, September.
    19. Shore, Adam & Tiwari, Manisha & Tandon, Priyanka & Foropon, Cyril, 2024. "Building entrepreneurial resilience during crisis using generative AI: An empirical study on SMEs," Technovation, Elsevier, vol. 135(C).
    20. Zhang, Jing A. & O'Kane, Conor & Bai, Tao, 2024. "How do university-firm interactions affect firm innovation speed? The case of Chinese science-intensive SMEs," Research Policy, Elsevier, vol. 53(7).

    More about this item

    Statistics

    Access and download statistics

    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:bla:bstrat:v:34:y:2025:i:8:p:10012-10032. 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: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    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.