Management localization and performance of MNCS in China : a contingent resource-based view

Although many foreign invested enterprises (FIEs) and consultants in China put the localization to a strategic level, management localization is still an emerging issue of human resource management in academic research. A few previous studies on management localization focused on the internal efficiency of the subsidiaries or parent-subsidiary relationship. The impact of management localization on the interaction between the subsidiary and local environment has received little attention. Moreover, localization lacks a consistent and valid definition. This thesis attempts to bridge the gap by systematically exploring the strategic impact of management localization. Management localization is defined as substituting expatriate managers with local managers. Based on resource-based view, local managers can be considered the vehicle of local managerial resources and thus can bring competitive advantage to the subsidiary. It is hypothesized that the effect of the management localization on the performance of the subsidiaries is contingent on cultural distance, localization emphasis, resource dependence, and decision participation of the local managers. In-depth interviews in China help to illuminate the concept validity and definition of management localization, and the data from a questionnaire survey in China are used to test the hypotheses. The results of hierarchical regression analyses provide partial support for the contingent resource perspective. The findings have meaningful implications for management localization at the multinationals’ subsidiaries and provide strong heuristics for future studies of this issue