Dynamics of Policy and Strategic Behavior: Study on Transnational Corporation Subsidiaries in China
Vipin Gupta, Jifu Wang, Jinhua Zhao

Globally, a new model of MNC based on the disaggregated corporate model and globally dispersed value chain network has emerged. In large emerging markets, the policy makers face a dilemma of how to situate the nation in this emergent global network. In China, the government policy has been biased towards encouraging a more centralized TNC control of R&D and manufacturing. We study the extent to which the TNCs have been able to adopt a distributed model in an institutional context that promotes a centralization strategy bias. In this paper, we examine the role of four factors: cultural distance, role assigned to the subsidiaries, TNC’s global strategy, and functional imperatives. Our investigation is guided by a series of analysis using a survey sample of TNC subsidiaries in China.

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