The Paths of Internationalization of Chinese Innovative Firms

Hongping Du,Liliana Mitkova,Na Wang

doi:10.3390/su12062575

Hongping Du, Liliana Mitkova + Show 1 more

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https://doi.org/10.3390/su12062575

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Abstract

Innovative enterprises from emerging markets, such as China, are a group of understudied enterprises, which could generate new and important views on internationalization. Some unique characteristics of Chinese innovative enterprises are creating new ideas that help to a better understanding of entry mode choice, market location choice, and entry speed in the paths of internationalization. Drawing on an unbalanced panel of Chinese innovative enterprises’ outward foreign direct investment (OFDI) event data, we analyzed the tendency of the paths of internationalization of Chinese innovative enterprises and the determining factors that influence the Chinese innovative enterprises’ choice in entry mode, market location, and entry speed. The results show that: (1) Chinese innovative enterprises are more likely to choose developing countries than developed countries. (2) When these firms conduct investment activities in developed countries, the probability rank (from high to low) of entry mode choice is acquisition, along with the wholly-owned subsidiary, exporting and joint venture. When these firms expand the business in developing countries, the entry mode of export is most likely to be chosen and the acquisition is least likely to be chosen. (3) This tendency and paths choice of internationalization in entry mode, market location and entry speed are influenced by the international experience, the multidimensional proximity, psychic distance, internationalization motivation, ownership structure, and innovation ability. Finally, we discuss these contributions and make some suggestions for future research.

Highlights

In the past three decades, outward foreign direct investment activities have gradually become a regular option for the development strategy of the Chinese multinational enterprises (MNEs) under the new state of economic globalization
(3) This tendency and paths choice of internationalization in entry mode, market location and entry speed are influenced by the international experience, the multidimensional proximity, psychic distance, internationalization motivation, ownership structure, and innovation ability
Drawing on international process theory, we develop a three aspect to analyze the path of internationalization of innovative firms, and to explain how factors influence the choice of internationalization path made by innovative firms to invest abroad

Summary

Introduction

In the past three decades, outward foreign direct investment activities have gradually become a regular option for the development strategy of the Chinese multinational enterprises (MNEs) under the new state of economic globalization. The outward FDI by the Chinese MNEs has been playing an increasingly important role all over the world since the implementation of “go out” policy in 2001 [2]. With the comprehensive promotion of “One Belt One Road” initiative policy, the Chinese MNEs accelerated the layout of international strategy in the world map [3]. Between 2001 and 2016, China witnessed a 68.5% annual growth in outward foreign direct investment (OFDI) flow and has been the second-largest capital export country, surpassed only by the United States, since 2015 [4]. The paths of internationalization of Chinese MNEs seem to defy the fundamental theories of mainstream internationalization [5]

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