How do emerging multinationals achieve sustainable development globally? The enabling mechanism of headquarter‐subsidiary structure in subsidiary sustainability

Abstract

Despite of the increasing attention on Sustainable Development Goals (SDGs) implementation, emerging multinational corporations (EMNCs), and their foreign subsidiaries, as the promising contributors and main agents respectively to address SDG issues worldwide, have been rarely noticed in theoretical research. Drawing upon the loose coupling theory, this study seeks to address the unique challenges EMNCs facing in managing their foreign subsidiaries' SDG implementation, and informs on tackling the potential conflicts in meeting multiple SDG requirements of home and host countries. Based on a sample of 295 foreign subsidiaries from Chinese manufacturing firms, this study adopts polynomial quadratic regression with response surface analysis to examine the relationship between headquarter‐subsidiary (HQS) coupling structure and subsidiary sustainable development, as well as the role of parent corporate environmental responsibility (CER) and FDI motives in this process. Our findings demonstrate support for the positive effect of HQS coupling structure on subsidiary sustainable development, and the moderating role of FDI motives is confirmed. This study reveals the key mechanisms and contingencies of SDG implementation at the subsidiary level, and provides theoretical insights for EMNCs to tackle SDG issues globally, obtain legitimacy locally and deepen international expansion accordingly.