Taking a prospector local-market focus and foreign subsidiary performance: evidence from China

Taking a prospector local-market focus and foreign subsidiary performance: evidence from China PurposeThe purpose of this paper is to examine the relationships among taking a prospector local-market focus, managerial ties (business ties and political ties) and performance in the Chinese market.Design/methodology/approachThis study, using a sample of 371 Taiwanese subsidiaries of multinational corporations (MNCs) in China, applies regression analyses to investigate the following questions: does taking a prospector local-market focus negatively impact performance? Do managerial ties (business ties and political ties) positively impact performance? Do these managerial ties positively moderate the effect of the taking a prospector local-market focus on performance?FindingsTaking a prospector local-market focus negatively impacts the performance of MNC subsidiaries. Business ties positively impact the performance of MNC subsidiaries, as do political ties. Finally, the impact of a prospector local-market focus on performance is positively moderated by business ties.Practical implicationsThe Chinese market is still a guanxi exchange business system and political connections usually require significant investment in exchange for advantageous market conditions. Thus, political ties must be carefully considered by MNC subsidiaries when they employ a prospector local-market focus in the Chinese business environment.Originality/valueFirst, this study clarifies the key relationship between the strategic choice of taking a prospector local-market focus and performance of MNC subsidiaries in the Chinese market. Second, it identifies the moderating role of managerial ties (political and business ties) in influencing the relationship between a prospector local-market focus and subsidiary. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

Taking a prospector local-market focus and foreign subsidiary performance: evidence from China

Management Decision, Volume 57 (3): 14 – Mar 11, 2019

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0025-1747
DOI
10.1108/MD-09-2017-0902
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to examine the relationships among taking a prospector local-market focus, managerial ties (business ties and political ties) and performance in the Chinese market.Design/methodology/approachThis study, using a sample of 371 Taiwanese subsidiaries of multinational corporations (MNCs) in China, applies regression analyses to investigate the following questions: does taking a prospector local-market focus negatively impact performance? Do managerial ties (business ties and political ties) positively impact performance? Do these managerial ties positively moderate the effect of the taking a prospector local-market focus on performance?FindingsTaking a prospector local-market focus negatively impacts the performance of MNC subsidiaries. Business ties positively impact the performance of MNC subsidiaries, as do political ties. Finally, the impact of a prospector local-market focus on performance is positively moderated by business ties.Practical implicationsThe Chinese market is still a guanxi exchange business system and political connections usually require significant investment in exchange for advantageous market conditions. Thus, political ties must be carefully considered by MNC subsidiaries when they employ a prospector local-market focus in the Chinese business environment.Originality/valueFirst, this study clarifies the key relationship between the strategic choice of taking a prospector local-market focus and performance of MNC subsidiaries in the Chinese market. Second, it identifies the moderating role of managerial ties (political and business ties) in influencing the relationship between a prospector local-market focus and subsidiary.

Journal

Management DecisionEmerald Publishing

Published: Mar 11, 2019

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