Institutional Distance,Legitimacy Constraint And Chinese Foreign Subsidiaries Of Multinational Enterprises Response Strategies

Under the background of global economic integration and the intensification of China's “Belt and Road” national initiative,China's interaction with foreign countries will become more frequent and more overseas subsidiaries of Chinese multinational corporations will go abroad to conduct management operations.However,overseas subsidiaries of Chinese MNCs are not well adapted to the host country's institutional environment and are faced with significant legal barriers,which has had an adverse effect on their management operations and operating performance in the host country.How to solve the "outside defect" management practice has become the focus of the current overseas subsidiaries of Chinese multinationals.Therefore,this paper deeply studies the influence of institutional environment factors on the legality of overseas subsidiaries of Chinese multinational corporations and the corresponding response strategies to deal with the legal constraints,and seeks to crack down on the unsatisfactory treatment of overseas subsidiaries of Chinese multinational corporations in host countries.This article reviews,summarizes,and combs relevant theories,including institutional foundation,resource-based,and market-based perspectives.It explores the relationship between institutional gaps and the legitimacy constraints of Chinese multinational corporations' overseas subsidiaries and their corresponding legalization strategies.Further,the regulatory role played by resource capabilities and the characteristics of the overseas subsidiaries of Chinese multinational corporations in dealing with legal constraints and legalization strategies was studied.The study found that:(1)The greater the institutional surplus,the greater the legitimacy constraint of the “identity attribute” and “management operation behavior” of the overseas subsidiaries of Chinese multinational corporations in the host country in the social and political legitimacy dimension;(2)The greater the institutional surplus,the smaller the legitimacy constraint of the “identity attribute” and “management operation behavior” of the overseas subsidiaries of Chinese multinational corporations in the host country in the cognitive legality dimension;(3)The greater the institutional deficit,the greater the legitimacy constraint of the “identity attribute” of the overseas subsidiaries of Chinese multinational corporations in the host country,and the lesser the legality constraint of “management operations” in the social and political legitimacy dimension;(4)The greater the institutional deficit,the greater the legitimacy constraint of the “identity attribute” and “management operation behavior” of the overseas subsidiaries of Chinese multinational corporations in the host country in the cognitive legality dimension;(5)The greater the institutional surplus,in the social and political legitimacy dimension,the overseas subsidiaries of Chinese multinationals are more inclined to adopt the homomorphic strategy to deal with the legality constraints of “identity attribute” and “management operation behavior”;in the cognitive legality dimension,adopt the manipulation strategy respond to the legality constraints of “identity attributes” and “management operations”;(6)The greater the institutional deficit,in the social and political legitimacy dimension,the overseas subsidiaries of Chinese multinationals are more inclined to adopt the decoupling strategy to deal with the legality constraints of “management operations” and adopt the homomorphic strategy to deal with the legality constraints of “identity attributes”;In the cognitive legitimacy dimension,adopting compliance strategy to deal with the legality constraints of “identity attribute” and “management operation behavior”;(7)Resources capacity and industry characteristics have a regulatory effect on the relationship between institutional gaps and the legal restrictions of overseas subsidiaries of Chinese multinationals;(8)Not only that,resource capabilities also have a regulatory effect on the relationship between the legitimacy constraints of overseas subsidiaries of Chinese MNCs in host countries and their corresponding legalization strategies.The related research in this paper integrates multiple perspectives,including institutional foundation,resource-based,and market-based perspectives.It not only can compensate for existing theoretical gaps and deficiencies,but also has strong practical significance.It can provide guidance for the overseas subsidiaries of Chinese multinational corporations to identify sources of legality constraints and take corresponding legalization strategies in the host country.