Post-entry growth in scope and scale among Chinese multinational enterprises: a structural embeddedness explanation

Abstract

PurposeBoth the scope of postentry growth and the scale of postentry growth are essential for Chinese multinational enterprises' aggressive internationalization. Yet, prior literature has not considered the synergistic approach of postentry growth that seeks the scope of growth and the scale of growth simultaneously. Building upon the embeddedness perspective and the learning view, we address how structural embeddedness directly affects firms' postentry growth in the form of scope and scale and indirectly affects postentry growth via both the scope of growth and the scale of growth. Particularly, we investigate the decreasing mediating effect of the growth's scale on the growth's scope when embeddedness strengthens.Design/methodology/approachWith a survey data set of 206 Chinese multinational firms from manufacturing and service industries, we conduct structural equation modeling (SEM), partial least squares path modeling (PLS-PM), instantaneous indirect effect assessment and hierarchical linear regression model to test our hypotheses.FindingsFirst, Chinese multinational enterprises’ (CMNEs) structural embeddedness is positively related to their scope of postentry growth, while has aU-shaped relationship with their scale of postentry growth. Second, CMNEs' scope of postentry growth mediates the relationship between structural embeddedness and the scale of postentry growth, the mediation effect counts for 33.5% of the over effect. Finally, the indirect effect of structural embeddedness on the scope of postentry growth through the scale of postentry growth is nonlinear. As the structural embeddedness strengthens, the positive indirect effect gradually weakens.Originality/valueWe believe this study further connects core international business research on postentry growth to the fast-growing literature on emerging markets multinational enterprises' internationalization. In addition, we undertake an initial effort in addressing an important gap in the literature: how structural embeddedness matters to firms' postentry growth. Moreover, this study finds important evidence to support the direct and indirect effect of structural embeddedness on postentry growth.