The roles of institutional dependence and slack financial resources: Implications for the challenge–hindrance stressors framework in headquarters-subsidiary relationships

The present study addresses a lacuna in research on the effects of subsidiary job demands within headquarters–subsidiary relationships. Specifically, it examines the differential impacts of challenge demands and hindrance demands on subsidiary top-management-team’s work
engagement, which in turn, predicts subsidiary operating revenue and local responsiveness performance. It also investigates whether institutional dependence and slack financial resources, representing the demands and resources from Job Demands–Resources model,
moderate links between: challenge demands and work engagement; hindrance demands and work engagement; work engagement and operating revenue; and work engagement and local responsiveness. Based on a survey with 238 Chinese subsidiaries and a secondary dataset (i.e. OSIRIS) that objectively captures these subsidiaries’ operating revenue, the results confirm that challenge demands and hindrance demands are positively and negatively related to work engagement, respectively. Work engagement is positively linked to both operating revenue and local responsiveness. Institutional dependence strengthens the link between challenge demands and work engagement, but it weakens the association between work engagement and local responsiveness. Slack financial resources strengthens the challenge demands to work engagement, work engagement to operating revenue, and work engagement to local responsiveness linkages. Implications of these findings for theory development and managerial practice are discussed.