Research On The Evolution Of MNC Subsidiary Role In China

Since the reform and opening up, the foreign investment policy, labor markets, competitive environment and high-tech development in China have undergone tremendous changes. In order to adapt to this change, the role of MNC subsidiaries in China are bound to have adjusted. And by combing the theoretical literature on MNCs, we can see that, MNC subsidiary has increasingly become an important study object of management academic in recent years, got wider attention from scholars. Therefore, further study of the evolution MNC subsidiary roles in China has significant importance in the MNC theory development and management practices of MNCs in China.Therefore, this paper takes MNC subsidiaries as the research object, aims to solve problems in three aspects: First, what are the roles of the MNC subsidiaries in China? Second, what is evolution of MNC subsidiary roles since their establishment? Third, which factor influences the evolution of MNC subsidiary roles in China? What is their mechanism of action?In order to solve these problems, the paper applied standardized research methods and empirical analysis. First, by literature review, this paper summarizes the classification dimensions, the evolutionary path and influencing factors of MNC subsidiary roles, and proposes appropriate conceptual models. Then through questionnaires, interviews, etc., this paper collected a total of 179 MNC subsidiary role information of early stage, present stage and expected after ten years. And this paper uses excel to summarize the role information and use SPSS 19.0 and AMOS 21.0 statistical analysis software to accomplish the empirical research of MNC subsidiary role evolutionary mechanisms, analysis the influence of various factors on the evolution of MNC subsidiary role in China. The main conclusions of this paper include:First, the MNC subsidiary roles can be classified by five dimensions, which is subsidiary autonomy, subsidiary capacity, subsidiary target market, value of subsidiary value chain activities and subsidiary knowledge flows. Through these five dimensions, the MNC subsidiary roles can be divided into 48 characters. Through questionnaires, this paper find that the subsidiary autonomy, subsidiary capacity and knowledge flows of MNC subsidiaries in China is generally high, and the value of subsidiary value chain activity increases with the operating life of subsidiary, also the target market of subsidiary ranges from Chinese market to global market. The most common role type of MNC subsidiaries in China is local senior producer, regional senior producer, global senior producer as well as local operation center and global operation center. In addition, by comparing roles of MNC subsidiaries from different origin country and industry, this paper finds that, the constitute proportion of MNC subsidiary roles from different origin countries barely changes, generally follow the trend that role of MNC subsidiary is dispersed initially, with the growing operating life in China, the role of MNC subsidiary becomes more focused. And MNC subsidiary role changes in different industries: the most common role in trading subsidiary is local senior producer since inception, and after a decade, the global senior producer will become the majority. The most common role in manufacturing subsidiary is local senior producer and global senior producer since inception, and after a decade, the global senior producer and global operation center will become the majority.Second, the evolutionary path of MNC subsidiary role in China mainly includes nine types, that is stable, development, degenerate, first stabilize then develop, first develop then stabilize, first degenerate then develop, first develop then degenerate, first degenerate then develop and first stabilize then degenerate. Specifically, since the establishment of the MNC subsidiary in China, the most common evolutionary path is development and stable, degenerate the less. By comparing evolutionary paths of MNC subsidiaries roles from different origin country and industry, this paper finds that, the constitute proportion of the evolutionary path of MNC subsidiary roles from different origin countries barely changes, and the evolutionary paths of subsidiary roles in different industries are quite different: the most common evolutionary path of subsidiary role in manufacturing, construction and other sectors is development, stable the second and degenerate the less; the most common evolutionary path of subsidiary role in trading, transport and logistics, communication and financial sector is stable, development the second and degenerate the less; the evolutionary path of subsidiary role in tourism sector equals with each other. From present stage to the expected ten years later, the quantity of stable and development evolution improved and the degenerate evolution reduced. There are significant differences among the evolutionary paths of MNC subsidiary roles from different origin countries: the most common evolutionary paths of MNC subsidiary roles from European and Asian countries is stable, development the second; and the constitute proportion of MNC subsidiary roles of different industries remains the same. Since the establishment of the MNC subsidiary in China to the expected ten years later, the most common evolutionary path of subsidiary role is development, stable the second, fluctuate and degenerate the less. Overall, the most common evolutionary path of subsidiary from origin country is development, stable the second; And the evolutionary paths of subsidiary roles in different industries are quite different: the most common evolutionary path of subsidiary role in trading, manufacturing, infrastructure, finance and other sectors is development, especially in manufacturing; the most common evolutionary path of subsidiary role in transport and logistic, computer, communication and catering sector is stable; the evolutionary role of subsidiary role in resource development is stable; there are fluctuating evolution in each sector with low proportion; there is no degenerate evolution in resource development, construction, tourism, finance and other sectors.Third, based on previous research, this paper innovatively brings the multinational competitive strategy factor into the study of role evolution of MNC subsidiary, proposes a dynamic model of subsidiary role evolution influence mechanism. And according to the different data type, this paper applies binary logistic regression, t test, ANOVA analysis and SEM to accomplish the empirical research. The results indicate that the multinational competitive strategy greatly influences the role evolution of MNC subsidiary in China, on the one hand, it affects the subsidiary autonomy, subsidiary capacity, subsidiary target market and subsidiary knowledge flows directly, on the other hand, in affects the ownership structure and market entry mode of subsidiary and the ownership structure and market entry mode further influences the subsidiary autonomy and subsidiary knowledge flows; The tasks of subsidiaries, subsidiary initiative and local environment influences the role evolution of MNC subsidiary in China, the tasks of subsidiaries affect the subsidiary autonomy, subsidiary initiative and local environment influences the subsidiary autonomy, subsidiary capacity, value of subsidiary value chain activities and subsidiary knowledge flows; Besides, the role evolution of subsidiary in China will affects the subsidiary competitive strategy, subsidiary capacity, subsidiary target market and subsidiary knowledge flows positively influence subsidiary initiative, and the subsidiary initiative will affects the application of transnational strategy.The innovation in this paper is mainly reflected in the following aspects:First, this paper interprets the role of MNC subsidiary from the perspective of multinational competitive aspect. This paper innovatively combines the multinational competitive theory with the MNC subsidiary role theory study. Through literature analysis and empirical research, analysis and compare the development of the competitive strategies of MNC subsidiary in China and point out the important influence of the competitive strategies on the evolution of MNC role, all of which has great theoretical contribution and practical significance.Second, this paper studies the classification of MNC subsidiary role and develops a measurement scale. This paper systematically reviews the MNC subsidiary role theory, and builds a theoretical framework of MNC subsidiary role classification based on the MNC competitive strategy theory, points out a five-dimension subsidiary role classification model. Then develop a measurement scale to implement the empirical research. Compared to the early study, the classification dimensions proposed by this paper is more comprehensive and significantly characterizes the characteristics of the subsidiary role, all of which has great theoretical contribution and practical significance.Third, this paper proposes a dynamic model of subsidiary role evolution influence mechanism. Previous scholars’ study of the subsidiary role evolution influence mechanism is mostly static and the selection of factors also has one-sidedness. Based on the previous studies, this paper selects multinational competitive strategies as a factor of subsidiary role evolution. Through standard analysis, this paper finds that the multinational competitive strategies significant influence the subsidiary role evolution. On one hand, the MNC competitive strategy has an impact on the evolution of MNC subsidiary roles, on the other hand, the evolution of MNC subsidiary roles have a further impact on the MNC competitive strategy by influneing the MNC subsidiary initiative. Then, this paper proposes a dynamic model of subsidiary role evolution influence mechanism, and verify the model by the empirical research of MNC subsidiary in China, all of which has great theoretical contribution and practical significance.Fourth, this paper inspects the evolutionary factors of MNC subsidiary role from the perspective of developing countries aspect. Traditional empirical study of MNC subsidiary role evolutionary factors are mostly based on the MNC subsidiaries located in developed countries, such studies merely focused on developing countries and most of which are case studies. Therefore, this paper builds up an empirical study of role evolutionary factors of MNC subsidiaries in China, enriches the MNC subsidiary role theory and MNC theory in developing countries, all of which has great theoretical contribution and practical significance.