Accelerate or delay? Big step internationalization and the speed of subsequent foreign expansion—evidence from Chinese MNEs

Abstract

Purpose In recent decades, emerging market multinational enterprises (EMNEs) have predominantly adopted a big step internationalization strategy to expand their business overseas. This study aims to examine the effect of big step internationalization on the speed of subsequent foreign direct investment (FDI) expansion for EMNEs. The authors also investigate the potential boundary conditions. Design/methodology/approach The authors use the random effects generalized least squares (GLS) regression following a hierarchical approach to analyze the panel data set conducted by a sample of publicly listed Chinese firms from 2001 to 2012. Findings The findings indicate that implementing big step internationalization in the initial stages accelerates the speed of subsequent FDI expansion. Notably, the authors find that this effect is more pronounced for firms that opt for acquisitions as the entry mode in their first big step internationalization and possess a board of directors with strong political connections to their home country’s government. In contrast, the board of director’s international experience negatively moderates this effect. Practical implications This study provides insights into our scholarly and practical understanding of EMNEs’ big step internationalization and subsequent FDI expansion speed, which offers important implications for firms’ decision-makers and policymakers. Originality/value This study extends the internationalization theory, broadens the international business literature on the consequences of big step internationalization and deepens the theoretical and practical understanding of foreign expansion strategies in EMNEs.