Research On Network Embeddedenss And Subsidiary Growth From The Perspective Of Parent-Subsidiary’s Twoway Governance

Facing the current business background of global economic integration and highly informationized enterprises,whether an enterprise can maintain sustainable and stable growth in the complex and changeable market competition is the most basic and objective standard to test the survival and development ability of an enterprise.Most listed companies in the Chinese context belong to enterprise groups,and the parent company forms a pyramid ownership structure with its subsidiaries through equity relations.Under the pyramid ownership structure,the parent company can dominate the governance arrangement of the subsidiaries by virtue of its holding position in the subsidiaries,but the status and role of the subsidiaries are ignored,and it is difficult to fully reflect the governance practice under the pyramid structure.Based on the two-way governance perspective of the parent-subsidiary company,this paper believes that even if the parent company can effectively control the subsidiary by relying on the pyramid ownership structure,the subsidiary can maintain a certain degree of autonomy and check the parent company’s excessive control over the subsidiary’s governance.Thus,two-way interaction and collaboration between parent company’s control over subsidiaries and subsidiaries’ checks and balances on parent companies can be formed within group companies.The growth of the subsidiary is realized in the game and interaction with the parent company,and the subsidiary’s own ability is the premise to improve the autonomy of "bargaining" with the parent company.As the main form of expansion beyond the boundaries of enterprises and enterprise organization expansion,the growth of subsidiaries not only refers to external changes such as sales scale and asset scale,but also includes internal changes in the industry status,core competence and technical efficiency of enterprises,so the growth of subsidiaries is actually the evolutionary growth of"quality" improvement and "quantity" expansion.At the same time,based on the social network theory,with the progress and change of economy,society and technology,enterprise organization and enterprise relationship are increasingly networked and embedded in broader social network structure,which changes the existence form and transaction nature of enterprises.The growth and development of subsidiaries are not only affected by the strategic positioning and control degree of the parent company within the group.It’s also influenced by the social networks it’s embedded in.Therefore,it is objectively necessary in theory and practice to study and explore the structure and form of subsidiaries’ embedding in the network,as well as the motivation and influencing factors of their growth after embedding in the network.Based on this,this study focuses on "how can emerging multinational corporations achieve innovation catch-up under complex dependence?" From the perspective of resource dependence theory and using the exploratory multi case study method,this paper constructs a two-dimensional asymmetric dependence theoretical framework of "technology-market",focuses on the reverse innovation strategy of emerging multinational corporations,distinguishes competitive reverse innovation from symbiotic reverse innovation,and identifies the internal mechanism of its formation.Further,based on the value possession mechanism,power utilization mechanism and dependence response mechanism of resource dependence theory,this paper constructs a theoretical model of the impact of "technologymarket" two-dimensional asymmetric dependence on reverse innovation,and based on the"benefit-cost" analysis framework under the power utilization mechanism,this paper constructs a theoretical model of the impact of reverse innovation on the survival of foreign subsidiaries,which also making an empirical test with the data of Chinese manufacturing listed companies and overseas subsidiaries.At present,the research on two-way governance of parent-subsidiary companies is still in the stage of theoretical analysis,and the perspective of two-way governance is rarely incorporated into the research field of subsidiary growth.In the past literature,some scholars have discussed network embedding and enterprise performance,and some scholars have studied the networked growth of subsidiaries.However,few studies have included parentsubsidiary relationship and network embedding into the same research framework to analyze the relationship between the two on the growth of subsidiaries.Then what are the forms and characteristics of network embeddedness of subsidiaries?How should it be divided,and whether different forms of network embedding will have an impact on the growth of subsidiaries?Can the parent-subsidiary interaction be regarded as a part of network embedding?What is the implementation path of network embedding for subsidiary growth?Is it also influenced by internal and external governance factors?Based on the above problems,this paper attempts to explore the influence of network embeddedness on enterprise key core competence and subsidiary growth,as well as the intermediary role of core competence in the two,through the research idea of "network embeddedness--key core competence--subsidiary growth",in an attempt to open the black box of network embeddedness affecting subsidiary development and growth.In this paper,network embeddedness is divided into two dimensions:relational embeddedness and structural embeddedness.The executive association degree represents relational embeddedness,and the centrality degree and structural hole of interlocking director network represent structural embeddedness.In addition,this paper also includes a number of regulating variables to enrich the research of subsidiary growth boundary conditions.Taking institutional environment,information transparency,equity balance and board fracture as the moderating variables of the model,the boundary effects of the main variables were tested.Based on the above objectives,this paper establishes a relevant mechanism model according to relevant theories and research methods,and uses scientific empirical testing methods to verify the rationality of the theoretical model.Taking the data of China’s A-share listed companies from 2010 to 2020 as research samples,this paper studies the influence of different embeddedness of subsidiaries on the growth of subsidiaries,explores their different mechanisms of action and situational influences,so as to clarify the multiple effects on the growth of subsidiaries.Through empirical analysis,the following conclusions are drawn:(1)Both relational embeddedness and structural embeddedness of subsidiaries can effectively promote the growth of subsidiaries.The association of senior executives of the parentsubsidiary company can solve the problem of information asymmetry of the parent-subsidiary company,and the central location and structural hole of the interlocking director network can bring abundant resources and information to the enterprise,thus promoting the growth of the enterprise.(2)Managers’ ability and innovation ability play an intermediary role in the relationship between network embeddedness and growth of subsidiaries.Both the degree and location of the network embeddedness of subsidiaries will affect the decision-making behavior of managers,as well as the innovation decision-making and R&D ability of enterprises,thus affecting the growth of subsidiaries.(3)Internal and external governance factors play a moderating role between network embeddedness and subsidiary growth.From the perspective of internal governance factors,the degree of equity checks and balances positively regulates the relationship between the network embeddedness of subsidiaries and the growth of subsidiaries.By improving a certain degree of equity checks and balances,subsidiaries can effectively resist the benefit encroachment of the parent company,protect the rights and interests of minority shareholders,and promote the positive impact of relationship embeddedness and structure embeddedness on the growth of subsidiaries.The board fault zone significantly negatively regulates the relationship between the network embeddedness of subsidiaries and the growth of subsidiaries.The strengthening of the board fault zone will inhibit the growth of subsidiaries.At the same time,information transparency represents the quality of information disclosure of subsidiaries.Through empirical test,it is found that it has a positive moderating effect on the relationship between network embedding and growth of subsidiaries.Institutional environment,as an external governance factor,also plays a regulating role in the relationship between network embeddedness and growth of subsidiaries.The system of different countries and regions varies greatly.A sound and perfect system environment effectively promotes the positive effect of network embeddedness and growth of subsidiaries.The innovations of this paper are as follows:(1)It introduces the research perspective of two-way governance of the parent-subsidiary company into the research framework of the subsidiary’s growth,and finds that the subsidiary’s growth is realized in the interaction process of "bargaining" with the parent company,which enriches the theory of two-way governance of the parent-subsidiary company.(2)By sorting out the research vein of network embeddedness and the growth of subsidiaries,the parent-subsidiary relationship is also regarded as a part of network embeddedness and included into the analysis dimension of network embeddedness.Social networks are complex and multi-dimensional,and scholars have not reached a unified conclusion on the division of network embedding dimensions.This paper focuses on the two dimensions of relationship embeddedness and structure embeddedness,and uses the executive correlation degree,the network centrality degree of interlocking directors and the structure hole to represent the parent-subsidiary binary relationship respectively,as well as the relationship between subsidiaries and different enterprises,so as to comprehensively consider the influence of network embeddedness on the behavior and decision of subsidiaries.(3)Through the analysis of the influence mechanism of the form of network embeddedness of subsidiaries on the growth of subsidiaries,it clarified the path and boundary conditions of how to realize the growth of subsidiaries under the dual influence of parent-subsidiary relationship and network embeddedness,empirically tested the two-way interaction effect between parent-subsidiary companies,and identified the intermediary role of enterprise key core competence.The subsidiary realizes the improvement of management ability and innovation ability through network embedding,which provides experience for the sustainable development of the subsidiary.(4)Verify the regulatory effects of institutional environment,information transparency,equity balance and board fracture zone on the relationship between network embeddedness and the growth of subsidiaries,and clarify the boundary conditions of external and internal governance factors in different embeddedness forms of subsidiaries and the growth of enterprises,so as to improve the theoretical basis and experience for the research on the growth of subsidiaries.