Contraction under minimum wages? Operational and financial advantages of multinational subsidiaries in China

•The paper theoretically explores whether multinational advantages help multinational subsidiaries mitigate the negative effect of minimum wage hikes on employment.•Drawing on the notion of operational flexibility, we find empirical evidence that dual-subsidiaries, i.e. subsidiaries that sell products to both the host and international markets, respond less to minimum wage hikes than their counterparts that sell products to either host or international markets alone.•This provides support to the notion of operational flexibility enabled by a broader market scope of dual-subsidiaries.•We also theorize that the access to internal capital markets (ICMs) provides another source of advantages to multinational subsidiaries compared to domestic firms. Our empirical analysis lends support to this conjecture.