| Abstract: | This study examines the underlying relationship between type of international strategy (global, multidomestic, and transnational) and subsidiary performance in the context of the People's Republic of China. After controlling for cultural, size, and equity effects, it is found that strategy type is important for the overall performance of international expansion. Different strategies affect multinational enterprise (MNE) subunits' performance differently. While global strategy is systematically related to low risk but suffers from loss of growth opportunities in an emerging market, multidomestic strategy is positively associated with local market expansion but comes at the expense of high uncertainty. Overall, transnational strategy outperforms other postures in aligning with a dynamic emerging market and attaining benefits from both ownership-specific and country-specific advantages. Transnational strategy increases operating flexibility which in turn spurs managerial discretion to respond profitably to the business potential of the global marketplace. © 1999 John Wiley & Sons, Inc. |
