Paradoxical FDI strategies, subsidiary financial performance, and managerial global mindset

This paper investigates how subsidiary managers' global mindset interacts with paradoxical foreign direct investment (FDI) strategies—exploratory FDI versus exploitative FDI—and MNE subsidiary financial performance. From an integrative lens of paradox theory, we argue that subsidiary managers' global mindset —a paradoxical cognitive capability— helps transcend the paradoxical FDI strategies and contribute to subsidiary financial performance. Our examination leverages a dyadic dataset including both the headquarters and subsidiaries of 249 Chinese multinational enterprises (MNEs). The findings reveal that subsidiary managers' global mindset can be a double-edged sword. On the one hand, a global mindset can support the pursuit of two paradoxical FDI strategies simultaneously and benefit subsidiary financial performance, when there is synergy between the two. On the other hand, a global mindset can be detrimental to subsidiary financial performance when a significant level of tension arises between the two paradoxical FDI strategies.