Antecedents of Local Market Initiative: An Investigation of Chinese Subsidiaries

This study aims to advance research on local market initiative, a form of subsidiary initiative that emanates from new opportunities in the local marketplace. Given that market-seeking MNCs in China face particular pressures stemming from local market conditions, China is particularly relevant research site to examine the concept. Drawing on agency theory, resource dependence theory and the resource based view of the firm and using survey data from 75 subsidiaries of German manufacturing companies in China, the effects of subsidiary autonomy and entrepreneurial culture on local market initiative are analyzed. The results provide evidence that both subsidiary autonomy and the presence of an entrepreneurial culture are associated with local market initiative. This research has major implications for MNCs and their market-seeking subsidiaries abroad and its designated focus on local market initiative constitutes a milestone in subsidiary initiative research.