Mitigating the Isomorphic Conflicts Faced by EMNEs in Southern Europe: The Case of Chinese Subsidiaries in Spain

Abstract

Emerging market multinational enterprises (EMNEs) are rapidly increasing their foreign direct investment around the world and, in particular, in the countries of Southern Europe. Although, international business scholars have been quick to put the spotlight on this new phenomenon, the cultural adaptation of EMNE subsidiaries to host-country environments, especially those of Europe, has remained largely unexamined. This question acquires particular relevance owing to the considerable cultural distance between emerging and developed economies and the isomorphic conflicts that can arise at the subsidiary level. Here, we examine this situation by reporting two case studies of Chinese subsidiaries operating in Spain. Our findings suggest that guanxi – the deep-rooted system of personal relations and social connections founded on mutual interests – plays a major role in the search for legitimacy undertaken by Chinese subsidiaries located in Southern Europe. The adoption and adaptation of Chinese cultural values and practices to the local environment allow the subsidiary to align itself with the culture of the parent organization at the same time as it embeds itself in the host environment, thus resolving any isomorphic conflicts.

Keywords

• EMNEs
• Subsidiaries
• Liability of foreignness
• Legitimacy
• Cross-cultural management
• Cultural adaptation
• Expatriates