Skip to main content
SpringerLink
Log in

Attention-Based Constraint to MNC Coevolution in China's Changing Stakeholder Environment

  • Original Paper
  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

The coevolution process enables organizations to adapt to and influence their external environment. Multinational corporations (MNCs) operating in dynamic foreign markets use this capability to achieve operational sustainability. MNCs in China operate in a changing stakeholder environment that features rising consumer activism and local stakeholders' persistent ethical problems and encounter recurrent consumer crises. Coevolving with this environment requires MNCs to react to consumer challenges and actively influence the environment by improving stakeholders’ ethical behavior. Based on the attention-based view and bounded rationality studies, we propose that the tension between expansion attention and stakeholder attention hinders MNCs from coevolving with this environment. Our analysis of MNC-linked consumer crises in China reveals that MNCs can reduce the consumer crisis risk by maintaining continuous attention to improving the ethical behavior of local employees, suppliers, and dealers. In contrast, MNCs' rapid local expansion weakens this stakeholder's attention, expanding MNCs' crisis risk. Our findings reveal an attention-based constraint to MNCs' coevolution and inform approaches to overcoming this constraint. This paper also extends international attention studies by affirming the significance of matching the focus of attention with environmental change for MNCs’ operational sustainability in foreign markets.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Data availability

The authors declare that the data used for this paper are available upon request.

References

  • Ahlstrom, D., Arregle, J. L., Hitt, M. A., Qian, G., Ma, X., & Faems, D. (2020). Managing technological, sociopolitical, and institutional change in the new normal. Journal of Management Studies, 57(3), 411–437.

    Article  Google Scholar 

  • Ambos, T. C., & Birkinshaw, J. (2010). Headquarters’ attention and its effect on subsidiary performance. Management International Review, 50, 449–469.

    Article  Google Scholar 

  • Bartlett, C. A., & Ghoshal, S. (1998). Managing across borders: The transnational solution. Harvard Business School Press.

    Google Scholar 

  • Battilana, J., Sengul, M., Pache, A. C., & Model, J. (2015). Harnessing productive tensions in hybrid organizations: The case of work integration social enterprises. Academy of Management Journal, 58, 1658–1685.

    Article  Google Scholar 

  • Berman, S., Wicks, A. C., Kotha, S., & Jones, T. (1999). Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance. Academy of Management Journal, 42(5), 488–506.

    Article  Google Scholar 

  • Birkinshaw, J., Bouquet, C., & Ambos, T. C. (2007). Managing executive attention in the global company. MIT Sloan Management Review, 48(4), 39–45.

    Google Scholar 

  • Birkinshaw, J., Holm, U., Thilenius, P., & Arvidsson, N. (2000). Consequences of perception gaps in the headquarters–subsidiary relationship. International Business Review, 9(3), 321–344.

    Article  Google Scholar 

  • Bjorkman, I., Barner-Rasmussen, W., & Li, L. (2004). Managing knowledge transfer in MNCs: The impact of headquarters control mechanisms. Journal of International Business Studies, 35(5), 443–455.

    Article  Google Scholar 

  • Boddewyn, J., & Brewer, T. (1994). International-business political behavior: New theoretical directions. Academy of Management Review, 19(1), 119–143.

    Article  Google Scholar 

  • Bouquet, C., & Birkinshaw, J. (2008). Weight versus voice: How foreign subsidiaries gain attention from corporate headquarters. Academy of Management Journal, 51(3), 577–601.

    Article  Google Scholar 

  • Bouquet, C., Morrison, A., & Birkinshaw, J. (2009). International attention and multinational enterprise performance. Journal of International Business Studies, 40(1), 108–131.

    Article  Google Scholar 

  • Buckley, P. J., Chen, L., Clegg, L. J., & Voss, H. (2016). Experience and FDI risk-taking: A microfoundational reconceptualization. Journal of International Management, 22(2), 131–146.

    Article  Google Scholar 

  • Bundy, J., Pfarrer, M. D., Short, C. E., & Coombs, W. T. (2016). Crises and crisis management: Integration, interpretation, and research development. Journal of Management, 43(6), 1661–1692.

    Article  Google Scholar 

  • Cantwell, J., Dunning, J. H., & Lundan, S. M. (2010). An evolutionary approach to understanding international business activity: The coevolution of MNEs and the institutional environment. Journal of International Business Studies, 41, 567–586.

    Article  Google Scholar 

  • Cantwell, J., & Mudambi, R. (2005). MNC competence-creating subsidiary mandates. Strategic Management Journal, 26, 1109–1128.

    Article  Google Scholar 

  • Carroll, A. B. (1989). Business and society: Ethics and stakeholder management. South-Western.

    Google Scholar 

  • Certo, S. T., Busenbark, J. R., Woo, H., & Semadeni, M. (2016). Sample selection bias and Heckman models in strategic management research. Strategic Management Journal, 37(13), 2639–2657.

    Article  Google Scholar 

  • Chen, D. H., Jiang, D. W., Liang, S. K., & Wang, F. P. (2011). Selective enforcement of regulation. China Journal of Accounting Research, 4, 9–27.

    Article  Google Scholar 

  • Chen, D., Newbury, W., & Park, S. H. (2009). Improving sustainability: An international evolutionary framework. Journal of International Management, 15(3), 317–327.

    Article  Google Scholar 

  • Contractor, F. J. (2007). Is international business good for companies? The evolutionary or multi-stage theory of internationalization vs. the transaction cost perspective. Management International Review, 47(3), 453–475.

    Article  Google Scholar 

  • Crilly, D. (2011). Predicting stakeholder orientation in the multinational enterprise: A mid-range theory. Journal of International Business Studies., 42, 694–717.

    Article  Google Scholar 

  • Crilly, D., & Sloan, P. (2012). Corporate attention to stakeholders: Enterprise logic and an inside-out explanation. Strategic Management Journal, 33(10), 1174–1193.

    Article  Google Scholar 

  • Crilly, D., & Sloan, P. (2014). Autonomy or Control? Organizational architecture and corporate attention to stakeholders. Organization Science, 25(2), 339–355.

    Article  Google Scholar 

  • Currim, I. S., Lim, J., & Kim, J. W. (2012). You get what you pay for: The effect of top executives’ compensation on advertising and R&D spending decisions and stock market return. Journal of Marketing, 76, 33–48.

    Article  Google Scholar 

  • D’Aveni, R., & MacMillan, I. C. (1990). Crisis and the content of managerial communications: A study of the focus of attention of top managers in surviving and failing firms. Administrative Science Quarterly, 35(4), 634–657.

    Article  Google Scholar 

  • Durand, R., & Jacqueminet, A. (2015). Peer conformity, attention, and heterogeneous implementation of practices in MNEs. Journal of International Business Studies, 46, 917–937.

    Article  Google Scholar 

  • Dierickx, I., & Cool, K. (1989). Asset stock accumulation and sustainability of competitive advantage. Management Science, 35(12), 1504–1511.

    Article  Google Scholar 

  • Fan, G., Wang, X. L., & Zhu, Y. P. (2011). Neri Index of marketization of China’s provinces 2011 report. Economic Science Press.

    Google Scholar 

  • Geringer, J. M., Tallman, S., & Olsen, D. M. (2000). Product and international diversification among Japanese multinational firms. Strategic Management Journal, 21(1), 51–80.

    Article  Google Scholar 

  • Ghemawat, P. (2007). Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business School Press.

    Google Scholar 

  • Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30, 425–445.

    Article  Google Scholar 

  • Hill, A. D., Johnson, S. G., Greco, L. M., O’Boyle, E. H., & Walter, S. L. (2021). Endogeneity: A review and agenda for the methodology-practice divide affecting micro and macro research. Journal of Management, 47(1), 105–143.

    Article  Google Scholar 

  • Hofstede, G. (2003). Culture’s consequences: Comparing values, behaviors. Sage Publications.

    Google Scholar 

  • Kalnins, A. (2018). Multicollinearity: How common factors cause Type 1 errors in multivariate regression. Strategic Management Journal, 39(8), 2362–2385.

    Article  Google Scholar 

  • Kano, L., & Verbeke, A. (2018). Theories of the multinational firm: A microfoundational perspective. Global Strategy Journal, 9(1), 117–147.

    Article  Google Scholar 

  • Kolk, A., & van Tulder, R. (2002). Child labor and multinational conduct: A comparison of international business and stakeholder codes. Journal of Business Ethics, 36(3), 291–301.

    Article  Google Scholar 

  • Kolk, A., van Tulder, R., & Welters, C. (1999). International codes of conduct and corporate social responsibility: Can transnational corporations regulate themselves? Transnational Corporations, 8(1), 143–180.

    Google Scholar 

  • Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411–432.

    Article  Google Scholar 

  • Kostova, T., & Roth, K. (2002). Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, 45(1), 215–233.

    Article  Google Scholar 

  • Laamanen, T., Maula, M., Kajanto, M., & Kunnas, P. (2018). The role of cognitive load in effective strategic issue management. Long Range Planning, 51(4), 625–639.

    Article  Google Scholar 

  • Lewin, A. Y., Long, C. P., & Carroll, T. N. (1999). The coevolution of new organizational forms. Organization Science, 10(5), 535–550.

    Article  Google Scholar 

  • Lewin, A. Y., & Volberda, H. W. (1999). Prolegomena on coevolution: A framework for research on strategy and new organizational forms. Organization Science, 10(5), 519–535.

    Article  Google Scholar 

  • Luo, L., Ma, X., Makino, S., & Shinkle, G. A. (2020). Cluster status and new venture creation. Journal of Business Venturing, 35(5), 105985.

    Article  Google Scholar 

  • Ma, X. F., Delios, A., & Lau, C. M. (2013). Beijing or Shanghai? The strategic location choice of large MNEs’ host-country headquarters in China. Journal of International Business Studies, 44(9), 953–961.

    Article  Google Scholar 

  • March, J. G., & Simon, H. A. (1958). Organizations. Wiley.

    Google Scholar 

  • Ocasio, W. (1997). Towards an attention-based view of the firm. Strategic Management Journal, 18(Summer Special Issue), 187–206.

    Article  Google Scholar 

  • O’Donnell, S. W. (2000). Managing foreign subsidiaries: Agents of headquarters, or an interdependent network? Strategic Management Journal, 21, 525–548.

    Article  Google Scholar 

  • Overby, A. B. (2006). Consumer protection in China after accession to the WTO. Syracuse Journal of International Law and Commerce, 33(2), 347–392.

    Google Scholar 

  • Ozawa, T. (2005). Institutions, industrial upgrading and economic performance in Japan. Edward Elgar.

    Book  Google Scholar 

  • Pagnattaro, E., & Peirce, M. A. (2010). From China to your plate: An analysis of new regulatory efforts and stakeholder responsibility to ensure food safety. George Washington International Law Review, 42, 156.

    Google Scholar 

  • Reuters. (2019). Daimler suspends Mercedes franchise in China after customer complaint goes viral. https://www.reuters.com/article/us-china-mercedes-benz-idUSKCN1RS1OD. Accessed May 2021.

  • Rowley, T. J., & Moldoveanu, M. (2003). When will stakeholder groups act? An interest- and identity-based model of stakeholder group mobilization. Academy of Management Review, 28(2), 204–219.

    Article  Google Scholar 

  • Schneider, L. C., & Kozinets, R. (2011). Beyond enemy lines: Sociality in consumer activism. Advances in Consumer Research, 39, 398–403.

    Google Scholar 

  • Spencer, J. W. (2008). The impact of multinational enterprise strategy on indigenous enterprises: Horizontal spillovers and crowding out in developing countries. Academy of Management Review, 33(2), 341–361.

    Article  Google Scholar 

  • Stevens, J. P. (2009). Applied multivariate statistics for the social sciences (5th ed.). Routledge.

    Google Scholar 

  • Tan, J. (2009). Institutional structure and firm social performance in transitional economies: Evidence of multinational corporations in China. Journal of Business Ethics, 86, 171–189.

    Article  Google Scholar 

  • Tan, J., & Tan, D. (2005). Environment–strategy co–evolution and co-alignment: A staged model of Chinese SOEs under transition. Strategic Management Journal, 26, 141–157.

    Article  Google Scholar 

  • Tan, J., & Wang, L. (2011). MNC strategic responses to ethical pressure: An institutional logic perspective. Journal of Business Ethics, 98(3), 373–390.

    Article  Google Scholar 

  • The New York Times. (2011). Chinese city shuts down 13 Wal-Marts. https://www.businessinsider.com/wal-mart-shuts-down-stores-in-chinas-chongqing-to-investigate-pork-label-scandal-2011-10. Accessed May 2021.

  • The Wall Street Journal. (2006). Dell's Ad mistake over laptop chip spurs China suits. https://www.wsj.com/articles/SB115550536475234500. Accessed May 2021.

  • Thomas, H., Torben, P., & Volberda, H. W. (2007). The role of path dependency and managerial intentionality: A perspective on international business research. Journal of International Business Studies, 38(7), 1055–1068.

    Article  Google Scholar 

  • Verbeke, A., & Yuan, W. (2005). Subsidiary autonomous activities in multinational enterprises: A transaction cost perspective. Management International Review, 45(2), 31–52.

    Google Scholar 

  • Vermeulen, F., & Barkema, H. (2002). Pace, rhythm, and scope: Process dependence in building a profitable multinational corporation. Strategic Management Journal, 23, 637–653.

    Article  Google Scholar 

  • Wagner, H. (2004). Internationalization speed and cost efficiency: Evidence from Germany. International Business Review, 13(4), 447–463.

    Article  Google Scholar 

  • Wu, J. Y., & Davidson, D. K. (2011). The business-government-society relationship: A comparison between China and the US. Journal of Management Development, 30(1), 112–125.

    Article  Google Scholar 

  • Zhao, M., Park, S. H., & Zhou, N. (2014a). MNC strategy and social adaptation in emerging markets. Journal of International Business Studies, 45, 842–861.

    Article  Google Scholar 

  • Zhao, M., Tan, J., & Park, S. (2014b). From voids to sophistication: Institutional environment and MNC CSR crisis in emerging markets. Journal of Business Ethics, 122(4), 655–674.

    Article  Google Scholar 

  • Zhu, Q., Cordeiro, J., & Sarkis, J. (2013). Institutional pressures, dynamic capabilities and environmental management systems: Investigating the ISO 9000 e Environmental management system implementation linkage. Journal of Environmental Management., 114, 232–242.

    Article  Google Scholar 

Download references

Acknowledgements

We are grateful to the guest editors Professor Justin Tan and Professor Liang Wang and the three anonymous reviewers for their constructive comments and suggestions that have helped improve the article significantly. The project was funded by the research grants from Nanyang Business School and Chinese University of Hong Kong (Projects 5501126 and 3134060).

Author information

Authors and Affiliations

  1. Nanyang Business School, Nanyang Technological University, Block S3, 50 Nanyang Avenue, Singapore, 639798, Singapore

    Meng Zhao & Seung Ho Park

  2. Department of Management, CUHK Business School, Chinese University of Hong Kong, Hong Kong, China

    Xufei Ma

  3. International Business School, Zhejiang University, Haining, Zhejiang, China

    Lingli Luo

Authors
  1. Meng Zhao
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Xufei Ma
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Seung Ho Park
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Lingli Luo
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Lingli Luo.

Ethics declarations

Conflict of interest

The authors declare that they have no conflict of interest.

Ethical Approval

The ethical statements are not applicable for this paper.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Zhao, M., Ma, X., Park, S.H. et al. Attention-Based Constraint to MNC Coevolution in China's Changing Stakeholder Environment. J Bus Ethics 186, 797–814 (2023). https://doi.org/10.1007/s10551-023-05433-w

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-023-05433-w

Keywords

Search

Navigation