Global Integration or Local Responsiveness? Insights from the Case of Chinese MNEs in India

Abstract

In the 1980s, the global integration and local responsiveness (the I-R) framework was first proposed for multinational enterprises (MNEs) to deal with the dilemma of delivering standardised products and services at subsidiaries across the world or tailoring their products and services to the context of different countries. Researchers suggest MNEs make a trade-off between the two ends of global integration and local responsiveness rather than pursue either extreme of the dichotomy. Based on this trade-off, our study aims to explore the degree of I-R that a subsidiary of MNEs chooses. We argue that this depends on the internal dynamics within the company (e.g. ownership structure) and the external environmental factors (e.g. institutional distance and competition intensity). To illustrate the I-R framework, this study undertakes a comparison between two Chinese MNEs and proposes the argument that the strategic investments made by Chinese firms vary in motivations depending on the firm ownership structure. In this case, the firms analysed in this study are Sany Heavy Industry (a private Chinese enterprise) and CRRC Corporation Limited [a state-owned enterprise (SOE)]. Our study contributes to the literature on the I-R in MNEs as well as to the growing literature on MNE subsidiaries in emerging economies.