Growth and maintenance: how a subsidiary's environmental relationships with technological innovation affect its initiatives

Abstract

PurposeIn this study, the authors argue that the host environment of subsidiaries may affect subsidiary initiative via relationships with two stakeholders: public and private stakeholders. On the one hand, the public relationships and private relationships of subsidiaries may affect their tendency to demonstrate initiative. On the other hand, including technological innovation as a moderating effect supports the tendency towards subsidiary initiative.Design/methodology/approachThis study obtained the data through a survey of 216 subsidiaries in China; chief executive officer or senior managers were selected as the data collection sources. AMOS analysis was used to address sophisticated data analysis issues.FindingsFindings based on samples from China support these arguments. The findings contribute to the literature by highlighting that different types of subsidiary initiative coexist within subsidiaries and by accounting for the external environmental relationships and technological innovation.Originality/valueWhat determines subsidiary initiatives in the host market? We find that (1) public relationships directly influence subsidiary initiatives, and (2) this effect is moderated by technological innovation. The theoretical framework shows that this interaction arises from the separate impacts of innovation characteristics, especially a foreign subsidiary's interest in entrepreneurial action affecting both growth and maintenance initiatives. In summary, this article concludes that initiatives are not simply the activities of subsidiaries. The authors hope that the strong explanatory and predictive power of these external factors and technological innovation are further enhanced when these concepts are integrated with the charters of internationalizing MNEs.