Headquarters–subsidiary exchanges and relationship quality: Moderating roles of subsidiary establishment mode and managers’ identity with the subsidiary

Drawing on social exchange and social identity theories, we examine how the identity orientations of subsidiaries and subsidiary managers interact with interorganizational and interpersonal exchanges between headquarters and subsidiary (HQ–Sub) in shaping the quality of HQ—Sub relationships. Specifically, we argue that organizational and managerial exchanges between headquarters and subsidiaries have a positive impact on HQ–Sub relationship quality. The effect of HQ–Sub organizational exchange on HQ–Sub relationship quality is moderated by the subsidiary’s establishment mode, while the effect of HQ–Sub managerial exchange on HQ–Sub relationship quality is moderated by subsidiary managers’ identity with the subsidiary. Our arguments are empirically tested with survey data collected from senior managers of HQ–Sub dyads in 312 Chinese multinational enterprises. Theoretical contributions and practical implications are discussed in the paper.