Performance implications of internationalization strategies for Chinese MNCs

Abstract

Purpose – The purpose of this paper is to investigate the performance implications of internationalization strategies for Chinese multinational corporations (MNCs). Specifically, the authors examine the individual and joint effects of speed of internationalization in developed and developing countries and age on Chinese MNCs’ performance. Design/methodology/approach – The authors constructed a unique and comprehensive database on the internationalization strategies of 206 Chinese firms over 14 years and deployed random-effect regressions to assess the effects of age, speed of expansion in terms of number of subsidiaries and countries, and the types of destination (developed vs developing country) on firm performance. Findings – The analyses show that age is negatively related to performance but rapid expansion of subsidiaries in developing countries and geographic scope in developed countries are positively related to performance. In addition, the impacts of young age and two types of expansion, fast expansion of subsidiaries in developing countries and fast expansion of geographic scope in developed countries, are cumulative. Originality/value – The authors combine the arguments of the learning advantages of newness and fast movers and model the simultaneous effects of age and speed of two types of international expansion (in terms of number of subsidiaries and countries) in both developed and developing countries on performance. The strong empirical support for the hypotheses based on analyses of a unique data set of Chinese MNCs’ internationalization patterns lends credence to the proposed model.