The Influence of the Overseas Subsidiary’s Market Orientation, Entrepreneurship, and Network on Its Dynamic Capability

As competition in the traditional market of developed countries getting more intense, Multinational Corporations(MNCs) have fast entered the emerging markets, such as China, India, BrazI.L., and Vietnam, which are identified as strategic places for their future development. Recently, the dynamic capability view is getting attention as a complementary theory to fill the gap of the static resource-based view and it explains MNCs’ operation and performance in the dynamic emerging market in depth. According to the previous literature review, we set up eight hypotheses and run the structured equation modeling to test the hypotheses. Our findings are as follows: First, understanding informal institutions fully mediates the relationship between market orientation and dynamic capability of the overseas subsidiary. Secondly, understanding informal institutions partially mediates the relationship between entrepreneurial orientation and dynamic capability of the overseas subsidiary. Thirdly, the overseas subsidiary’s network with the central and the local government do not have a positive impact on its dynamic capability. At the end of the paper, limitation of this study and future study are discussed.