German MNEs’ sustainable management practices in China: A pathway toward dual-compliance

This study investigates how German multinational enterprises (MNEs) adapt their corporate sustainability strategies in Chinese subsidiaries to navigate dual compliance requirements based on EU/German regulations and China's sustainability policies. Drawing on qualitative data from 30 senior managers from German MNEs' subsidiaries in China, we identify institutional and organizational tensions, such as misalignment between global mandates and local realities, the profitability-sustainability paradox, and supply chain complexities. Using an integrated framework integrating Institutional, paradox, and Stakeholder Theories, we examine how subsidiaries respond through management mechanisms such as structural and financial steering, stakeholder reprioritization, innovation, and cultural internalization. These findings further reveal the pathways through which adapted practices influence the sustainability of Chinese supply chains, particularly the transition from supply chain managers to ecosystem orchestrators via collaborative innovation, supplier development, and association-led co-regulation. These findings provide guidance for MNEs to establish resilient sustainability strategies in complex international business environments. This study contributes novel insights to the sustainable development literature by delivering a context-rich understanding of dual compliance and the adaptation of sustainability strategies across borders.