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How Do the Normativity of Headquarters and the Knowledge Autonomy of Subsidiaries Co-Evolve? Capability-Upgrading Processes of Chinese Subsidiaries in Belgium

Author

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  • Manuel Hensmans
  • Guangyan Liu

Abstract

To successfully compete with advanced market multinationals (AMNEs), emerging market multinationals (EMNEs) have to access higher innovation capabilities from their autonomously operating advanced economy subsidiaries. There are two competing schools of thought on how EMNE subsidiaries obtain capability-upgrading autonomy from their headquarters. The first school of thought embraces a knowledge-based, boundedly rational perspective on headquarters’ delegation of capability-upgrading autonomy. The second argues that normative stakeholder priorities pervade headquarters’ capability-upgrading logic, with a “headquarters knows best logic” standing in the way of knowledge-based subsidiary autonomy. This paper adopts a process perspective to understand how EMNE headquarters’ logics and subsidiaries’ mandate for capability-upgrading co-evolve over time. Drawing on the case of Chinese multinational subsidiaries (CMNEs) in Belgium we find that subsidiary managers’ ability to challenge normative expectations is a condition to headquarters acting in a knowledge-based manner. We contribute to the literature on EMNE capability-upgrading by developing several propositions on how autonomy negotiation processes between headquarters and subsidiary evolve over time; depending on the historical imprinting of home success values, the socialisation in how to respond to failure and the emergence of constructive conflict.

Suggested Citation

  • Manuel Hensmans & Guangyan Liu, 2018. "How Do the Normativity of Headquarters and the Knowledge Autonomy of Subsidiaries Co-Evolve? Capability-Upgrading Processes of Chinese Subsidiaries in Belgium," ULB Institutional Repository 2013/273674, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/273674
    Note: SCOPUS: ar.j
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    Cited by:

    1. Yameng Li & Ruosu Gao & Jingyi Wang, 2021. "Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda," JRFM, MDPI, vol. 14(10), pages 1-22, October.
    2. Tina C Ambos & Sebastian H Fuchs & Alexander Zimmermann, 2020. "Managing interrelated tensions in headquarters–subsidiary relationships: The case of a multinational hybrid organization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(6), pages 906-932, August.
    3. L. Jeremy Clegg & Hinrich Voss, 2018. "Chinese Outward FDI as a Stimulus to Research in International Business," Management International Review, Springer, vol. 58(1), pages 1-8, February.
    4. Zhao, Shasha & Liu, Xiaohui & Andersson, Ulf & Shenkar, Oded, 2022. "Knowledge management of emerging economy multinationals," Journal of World Business, Elsevier, vol. 57(1).
    5. Cuervo-Cazurra, Alvaro & Li, Cheng, 2021. "State ownership and internationalization: The advantage and disadvantage of stateness," Journal of World Business, Elsevier, vol. 56(1).
    6. Kuang-Hua Hu & Ming-Fu Hsu & Fu-Hsiang Chen & Mu-Ziyun Liu, 2021. "Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-27, December.

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