The Role of Value Appropriation Capability of Chinese Multinationals in Operating Cross-Border Business Models

Hanxu Quan,George Kwame Agbanyo,Tachia Chin,Francesco Caputo

doi:10.3390/su13179812

Abstract

In an ever increasingly competitive and unstable global market, multinational corporations (MNCs) are greatly pressurised to use inherent capacities and develop effective cross-border business models (CBMs) that can transform value into the desired outcome. Amid high uncertainties, MNCs are required to develop some critical capabilities to operate CBMs to the best of their ability. More specifically, it is vital for MNCs to have a unique capability that enables them to more effectively synergise with these commonly recognised capabilities (e.g., technological innovation capabilities (TIC) and marketing capability (MC) alongside the global value chain (GVC)) to sustain balance among and gain profits with stakeholders. From the literature review, we first identified value appropriation capability (VAC) as one of the most important capabilities and thereby developed three hypotheses. Based on the hypotheses, we investigated how VAC efficiently moderates MNCs’ capabilities to appositely operate CBMs. Then, empirical panel data between 2011 and 2019 in the Chinese manufacturing industry were used to examine the hypotheses. The results reveal that VAC, TIC and MC positively impact MNC performance. Moreover, VAC–TIC interaction significantly improves MNC performance, and VAC–MC interaction positively improves MNC performance. Our findings provide novel insights into the CBM literature by examining the importance of VAC for operating CBMs alongside its multifaceted effects on MNC performance, especially in times of uncertainty.

Highlights

Alongside the prevalence of the global value chain (GVC), it has become a common strategy for multinational corporations (MNCs) to operate with strategic cross-border business models (CBMs) to achieve competitive advantages [1,2,3,4,5]
We aim to investigate the role of value appropriation capability (VAC) in influencing the performance of MNCs with appropriate CBMs during uncertainty, with an important interest in the moderating power of VAC on technological innovation capability (TIC) and marketing capability (MC)
The aforementioned results demonstrate that MNCs differed considerably in technological innovation and marketing capabilities

Summary

Introduction

Alongside the prevalence of the global value chain (GVC), it has become a common strategy for multinational corporations (MNCs) to operate with strategic CBMs to achieve competitive advantages [1,2,3,4,5]. The GVC framework illustrates how value is created and captured by MNCs through the cooperation of various stakeholders, such as R&D partners, raw material suppliers, distributors and customers Echoing this concept, the literature shows that, to operate CBMs, MNCs need to develop some key capabilities for better collaboration with multiple stakeholders, among which technological innovation capability (TIC) and marketing capability (MC) are considered the most important ones [6,7]. The literature shows that, to operate CBMs, MNCs need to develop some key capabilities for better collaboration with multiple stakeholders, among which technological innovation capability (TIC) and marketing capability (MC) are considered the most important ones [6,7] It is because, while TIC and MC are considered the fundamental engine of a self-transformation process, they are a means to assess and predict customer needs and competitor behaviours accurately in the ever-changing global market environment [8,9]. For MNCs, TIC and MC are the central platforms of permanent value transformation from knowledge creation, new products and service processes to cost management and customer delivery; every organisation needs TIC to create value and MC as a vehicle to deliver it to the customers.

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Conclusion