Headquarters-subsidiary (HQ-Sub) relationships in multinational corporations (MNCs) are complex and influenced by various factors including political connections, entry mode, motivation, networks, and resource commitment. Existing research often focuses on single objectives in MNC global strategies, neglecting the multifaceted nature of these strategies. Furthermore, the resource dependence perspective, while highlighting the impact of technological resource commitment, often overlooks the contribution from multiple sources (HQ, subsidiary, partners). This study bridges these gaps by exploring the combined effects of FDI motivations (resource-seeking and market-seeking) and technological resource commitment (from HQ, subsidiary, and partners) on the use of process control mechanisms in HQ-Sub relationships. The study focuses on Taiwanese manufacturing MNCs investing in China in 2003, a period representing a significant inflection point in global and Chinese economic development. This context allows for an examination of FDI from a newly industrialized economy (NIE) to an emerging economy, a perspective relatively under-represented in the literature. The study aims to provide managerial insights for HQs based in NIEs to determine effective control mechanisms over their subsidiaries in emerging economies, particularly relevant in rapidly growing but institutionally diverse environments.

The study draws on agency theory and the resource dependence perspective. Agency theory posits that differences in interests and information asymmetry between principals (HQs) and agents (subsidiaries) necessitate control mechanisms. Process control, focusing on influencing subsidiary operations, is a key behavioral control mechanism. The literature highlights FDI motivations, particularly resource-seeking (access to low-cost resources) and market-seeking (access to new markets), as important factors shaping control choices. However, studies often focus on one motivation or neglect the nuanced interaction between motivations and resource commitment. The resource dependence perspective emphasizes the role of resource commitment in determining bargaining power and control, but often focuses on a single source of resources. This study expands this perspective by examining technological resource commitment from three sources: headquarters, subsidiary, and partners. The literature review reveals the existing gaps in understanding the combined effects of these factors, particularly in the context of FDI from NIEs to emerging economies.

This study uses data from a 2003 survey of Taiwanese manufacturing firms with FDI in China. A total of 1015 HQ-Sub relationships were analyzed. The dependent variable is process control, measured by five items reflecting HQ influence on subsidiary business, pricing, marketing, personnel, and financial strategies. The independent variables include resource-seeking and market-seeking FDI motivations (each measured by three items), and technological resource commitment from the HQ, subsidiary, and partners (measured by four, five, and three items, respectively). Control variables encompass factors at the parent firm level (size, international experience, R&D expenses), subsidiary level (entry mode, fixed asset investment intensity, experience, importance in group), and host country level (government restrictions on imports/exports, equity ownership, social customs, government inefficiency, infrastructure, qualified expertise, legal framework). The data were analyzed using hierarchical regression analysis, with control variables entered in Model 1, motivation variables in Model 2, and resource commitment variables in Model 3 and 4. Robustness checks were conducted using subsamples based on firm size and industry.

The hierarchical regression analysis revealed the following key findings: 1. **Hypothesis 1 supported:** Resource-seeking motivation is positively associated with process control (β = 0.08, p < 0.01). 2. **Hypothesis 2 supported:** Market-seeking motivation is negatively associated with process control (β = -0.12, p < 0.01). 3. **Hypothesis 3 supported:** HQ technological resource commitment is positively associated with process control (β = 0.16, p < 0.01). 4. **Hypothesis 4 supported:** Subsidiary technological resource commitment is negatively associated with process control (β = -0.14, p < 0.01). 5. **Hypothesis 5 supported:** Partner technological resource commitment is negatively associated with process control (β = -0.11, p < 0.01). The model including all independent and control variables (Model 4) explained 19% of the variance in process control. Robustness checks confirmed the consistency of the findings across different subsamples (based on firm size and industry). Control variables such as entry mode, government restrictions on equity, government inefficiency, subsidiary experience, and industry type also showed significant impacts on process control.

The findings highlight the interplay between FDI motivations and resource commitment in shaping HQ control choices. Resource-seeking motivations, often associated with cost reduction and integration, lead to tighter process control. In contrast, market-seeking motivations, prioritizing local responsiveness and flexibility, result in reduced process control. The role of technological resource commitment underscores the importance of resource dependency in determining power dynamics. The contribution of resources by the HQ increases control, while subsidiary and partner resource commitment reduces it. These findings are consistent with agency theory and resource dependence theory, demonstrating the combined influence of goal incongruence, information asymmetry, and resource dependency on control mechanisms. The study's focus on Taiwanese MNCs in China provides a valuable perspective on FDI from NIEs to emerging markets, contrasting with much of the existing literature that predominantly focuses on FDI between developed economies.

This study makes several key contributions. It empirically demonstrates the importance of both FDI motivations and multiple sources of resource commitment in shaping HQ process control choices. The integration of agency theory and resource dependence theory provides a richer understanding of HQ-Sub relationships in an FDI context. The study's focus on NIE firms investing in emerging markets offers unique insights and managerial implications for MNCs operating in institutionally diverse environments. Future research could explore other control mechanisms, expand the scope to include service industries, examine longitudinal data to account for time-lag bias, and delve into the specific mechanisms of resource transfer and leverage. Investigating the motivations of subsidiaries in emerging markets would also provide valuable insights.

The study's findings may not generalize perfectly to other emerging markets or to contexts with different cultural distances between HQ and subsidiary. The focus on manufacturing firms limits the generalizability to service industries. The cross-sectional nature of the data prevents a full understanding of the dynamic evolution of control mechanisms over time. The lack of performance measures in the analysis limits the exploration of the relationship between control mechanisms and firm outcomes.