Coupling Mechanisms in Digital Transformation Systems: A TOE-Based Multi-Level Study of MNE Subsidiary Performance

This study explores how headquarters (HQ) digital transformation affects foreign subsidiaries’ performance in emerging market multinational enterprises (EMNEs). Based on the Technology–Organization–Environment (TOE) framework, parenting advantage theory, and loose coupling theory, we propose a multi-level contingency model. Using unbalanced panel data from 5543 foreign subsidiaries of Chinese A-share listed firms (2011–2021), we find that HQ digital transformation significantly improves subsidiary performance. However, this effect is shaped by key organizational and environmental factors. At the organizational level, excessive HQ control weakens the positive impact, while business group affiliation strengthens it. At the environmental level, strong intellectual property rights (IPR) protection enhances the benefits of digital transformation, whereas advanced host-country digital infrastructure substitutes internal support, reducing the effect. Robustness checks with alternative measures and instrumental variable estimation confirm our results. Theoretically, this study opens the “black box” of intra-MNE digital value transmission and identifies boundary conditions under which digital parenting is effective. Practically, it offers insights for EMNEs on optimizing digital strategies amid governance complexity and institutional diversity.