Global Firms Competing Locally: Management Localization and Subsidiary Performance in China

Drawing from the resource-based view, we propose that management localization serves as a mean to acquire local managerial resources for multinationals and that its effect on subsidiary performance depends on several key contextual variables. Based on a survey of foreign invested enterprises in China, we find that the degree of management localization alone does not improve subsidiary performance, while local resource dependency, headquarters support, and participation by local managers significantly moderate the effect of management localization on subsidiary performance. The findings have meaningful implications for human resource management at subsidiaries of multinationals in overseas markets.