Environmental risks,localization and the overseas subsidiary performance of MNEs from an emerging economy |
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| Institution: | 1. School of Business and Economics, Loughborough University, Leicestershire LE11 3TU, UK;2. Department of Strategic Management, Guanghua School of Management, Peking University, Beijing 100871, China;1. Dalhousie University, Rowe School of Business, 6100 University Avenue, Halifax, NS, Canada B3H 4R2;2. Western University, Ivey Business School, 1255 Western Road, London, ON, Canada N6G 0N1;3. Western University, Ivey Business School, 1255 Western Road, London, ON, Canada N6G 0N1;1. Department of Management and Global Business, Rutgers Business School—Newark and New Brunswick, 1 Washington Park, Newark, NJ 07102, United States;2. School of Business, Management and Economics, University of Sussex, Falmer, Brighton, BN1 9SL, United Kingdom;1. Johannes Gutenberg-University Mainz, Gutenberg School of Management & Economics, Jakob-Welder-Weg 9, Mainz 55099, Germany;2. RWTH Aachen University, School of Business and Economics, TIME Research Area, Kackertstrasse 7,Aachen 52072, Germany;1. Keele Management School, Keele University, Staffordshire, ST5 5BG, United Kingdom, United Kingdom;2. Department of Geographical Science, University of Maryland, MD 20742, United States |
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| Abstract: | Despite the fact that multinational enterprises (MNEs) from emerging economies invest actively in host countries with substantial risks, we have limited understanding of how they manage environmental risks to achieve desirable performance in their overseas subsidiaries. Drawing on resource dependence theory, we argue that different localization strategies serve as a mediating mechanism linking environmental risks and overseas subsidiary performance. Our findings based on a sample of Chinese MNEs show that industry risks significantly reduce the levels of input localization and marketing localization of Chinese MNEs’ subsidiaries, and thus negatively affect subsidiary performance. Political risks have an insignificant impact on input localization and marketing localization, but a positive direct impact on Chinese MNEs’ overseas subsidiary performance. We also find that state-owned MNEs’ localization strategies are more sensitive to industry risks compared with privately owned MNEs. |
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| Keywords: | Chinese MNEs Environmental risks Localization strategies Subsidiary performance |
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