Chinese Multinational Corporations Research Articles

Decision-Specific Experience and Imitative Behaviour in Foreign Ownership Structure Decisions: Evidence from Large Chinese Firms

Drawing on institutional theory, this article examines the importance of decision-specific experience and imitative behaviour of Chinese multinational corporations’ (MNCs) foreign ownership structure decisions. From a sample of 189 outward foreign direct investment (FDI) decisions, the authors find strong evidence to support the hypothesis that Chinese firms tend to choose ownership structures based on prior experience with similar ownership structures. Moreover, Chinese firms tend to follow the ownership structure patterns established by earlier Chinese entrants. This article also investigates the moderating effects of cultural distance and host country-specific experience.

Can socially responsible leaders drive Chinese firm performance?

Purpose– The relationship between socially responsible leaders, the key driver of corporate social responsibility (CSR) practices, and organizational financial performance is a salient issue in the global context for both CSR scholars and practitioners. The purpose of this paper is to provide much-needed insights into the interplay of responsible leadership, CSR practices, and organizational outcomes.Design/methodology/approach– It analyses 85 CEOs’ behaviors and their companies’ performance in a two-year database. It thereby enriches understanding of how leaders’ socially responsible decisions impact upon CSR engagement and firm performance.Findings– The results suggest that socially responsible leaders were positively related with organizational performance of return on equity (ROE). The aspects of integrity, morality, and stakeholder relationship aspects of responsible leadership are closely related to CSR. However, CSR practices were negatively related to ROA and ROE. It implies that in China CSR activities could not boost organizational performance in the short term, at least in two years.Research limitations/implications– Our research has clear limitations. First, most selected firms are renowned large corporations, state-owned, or private enterprises. Foreign-owned enterprises are excluded. Second, the evaluation of CSP is based on the content analysis of firms’ annual CSR reports. Our research has clear limitations. First, most selected firms are renowned large corporations, state-owned, or private enterprises. Foreign-owned enterprises are excluded. Second, the evaluation of CSP is based on the content analysis of firms’ annual CSR reports.Practical implications– Our research has practical implications for the business world. First, CSR practices in China shall be conducted in a strategic way. Second, responsible leadership is of significance for the Chinese MNCs that are overseas to build trustful stakeholder relations with local stakeholders.Originality/value– Based on the data analysis, this study provides in-depth discussion of CSR situation in China and its relationship with firm performance, which is one of the first studies to examine responsible leadership in Chinese context and investigate the relationship between responsible leadership and organizational performance.

Performance implications of internationalization strategies for Chinese MNCs

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.

Chinese multinational corporations’ responses to host country trade unions: An eclectic approach

This paper explores Chinese multinational corporations’ responses to trade unions in host countries. Using an in-depth case study analysis of the policies on union representation and union–management relations in six Chinese multinational corporations, this paper demonstrates that Chinese multinational corporations’ responses to host country unions are primarily shaped by home and host institutions, rational choices of firms, and organizational learning. It concludes that while rational choice and institutional theory, the two dominant lenses used in existing literature, are helpful in understanding the industrial relations practices in multinational corporations, they need to be supplemented with an organizational learning perspective in an analysis of industrial relation practices in multinational corporations from emerging markets.

Multinational Firms and Cash Holdings: Evidence from China

This paper is the first to study the determinants of cash holdings of multinational firms in China from 2000 to 2013. Using different cutoffs of foreign sales ratio, we show that Chinese multinational firms do not hold significantly more cash relative to non-multinationals, except for the cutoff of 50% foreign sales ratio. This insignificance is dominant in non-SOE subsample. We also find that Chinese MNCs invest more but are less profitable, especially in non-SOE subsample. Overall, we conclude that the need of liquidity of multinational corporations in China is different from those in America.

The Political Risks of China’s Foreign Direct Investment in the Association of Southeast Asian Nations

In the past few years, China has experienced a rapid development of foreign direct investment (FDI) in the Association of Southeast Asian Nations (ASEAN.) In particular, the formation of CAFTA (the China-ASEAN Free Trade Area) will greatly encourage Chinese multinational corporations to go out and invest in ASEAN. However, the South China Sea disputes between China and several ASEAN countries have increased the political risks of China's FDI in ASEAN. This paper starts with an analysis of the political risks of China's FDI in ASEAN against the background of the South China Sea disputes, explains how to view and assess these political risks, and then comes up with a systematic and comprehensive mechanism for coping with the political risks of China's FDI in ASEAN against the background of the South China Sea disputes.

How Chinese "Snake" Swallows Western "Elephant": A Case Study of Lenovo’s Acquisition of IBM PC Division

Chinese Cross-Border Mergers & Acquisitions (CBMA) have accounted for a majority of Chinese outward direct investment (OFDI) and thus received much academic attention in recent years. Along with China’s integration with global economies, hundreds of Chinese companies have become multinational corporations (MNCs). Equipped with little internationalisation experiences and resources, Chinese MNCs not only struggle to survive intense competition, but also hunt for new opportunities in the global market. As late comers, Chinese MNCs have faced various problems and challenges, particularly in acquiring Western enterprises. Taking the deal of China’s Lenovo acquisition of IBM PC department (PCD) as a case, this paper offers insights into the specific features and characteristics behind Chinese CBMA. The study reveals Lenovo’s unique integration process and thus contributes to the theoretical development of CBMA literature. This study also evaluates the overall performance of Lenovo before and after acquisition of IBM PCD by using both subjective and objective measures.

Customer involvement and service firm internationalization performance: An integrative framework

To overcome the costs of doing business abroad, researchers have suggested either legitimacy- or efficiency-based solutions. However, both types of solutions still treat host-country customers as external to the theory. We highlight the role of customers in the international professional business service setting and argue that customer involvement is positively related to the perceived internationalization performance of multinational corporations (MNCs). MNCs with managers who perceive higher legitimacy pressures and greater needs for local knowledge tend to undertake greater efforts to build customer involvement. Furthermore, we develop a configuration framework between perceived strategic needs and MNCs’ capabilities. Specifically, MNCs that match relational capability with legitimacy needs and absorptive capacity with knowledge needs are more likely to engage in customer involvement. Our survey of 175 Chinese MNCs provides evidence that customer involvement is positively related to perceived internationalization performance. When MNCs’ relational capabilities are stronger, the positive relationship between legitimacy pressure and customer involvement increases. By contrast, MNCs with greater perceived market ambiguity improve customer involvement only when they have stronger absorptive capacity. We conclude that MNCs may simultaneously reduce legitimacy and efficiency costs through customer involvement after considering the fit between perceived environmental pressures and firm capabilities.

CSR Strategies in Greater China: Global, East Asian, American, European Style?

Abstract The concept of Corporate Social Responsibility emerged in the United States and spread to Europe and Asia while being adapted to national/local characteristics. Since borders between markets and societies are blurring and globalization is promoting MNCs which find themselves acting in hybrid societies, international institutions put efforts into the development and moral acceptance of global CSR standards. The scientific interest in CSR focused on the conflicts between company returns and benefits for society. The resulting concepts of performance-oriented, awareness-oriented and welfare-oriented CSR should facilitate the evaluation of CSR strategies implemented by MNCs. In research on the cultural dimensions of economies, it might be possible to allocate geographically the three concepts. Regarding the newly emerging Chinese MNCs, the paper aims to shed light on which concept they follow. On the one hand, CSR concepts of American and/or European MNCs that are present in China might serve as a role model; on the other hand, by learning from Taiwanese/ Hong Kong MNCs, a “greater China CSR approach” might emerge. Empirical studies and own field research suggest that compared to American and European companies, CSR is less deeply rooted in Chinese companies. Furthermore, significant differences between Mainland China, Hong Kong and Taiwanese companies indicate that a Greater Chinese CSR approach does not yet exist. Therefore, it cannot be assumed that American and European CSR concepts will experience a Chinese influence in the near future.

Chinese outward investments to emerging markets: evidence from Latin America

Purpose– This paper aims to analyse the characteristics of Chinese multinational corporations in other emerging economies using evidence from Latin America (LA)vis-à-visthe features found in previous studies of Chinese companies operating in developed countries.Design– It does this by studying the fit of theoretical frameworks recently developed for Chinese firms, the support from the government and the strength of their capabilities in relation to those of local competitors. The analysis is based on case studies with data collected from a theoretical sample of Chinese companies operating in LA.Findings– The results show that these companies seem to be following a pattern similar to that described by Mathews’s (2006) Linkage–Leverage–Learning, that the support from the government does not seem to play an important role in their internationalisation process, that they appear to have developed a set of capabilities strong enough to compete in the host market (in particular how to combine their strengths with those of local partners) and that they are engaged in a positive cycle of development that helps them to overcome some of the challenges and barriers of operating in Latin American emerging markets by complementing/leveraging their strengths with those of local firms.Originality/value– The findings indicate that Chinese companies are following patterns in their internationalisation to Latin American emerging markets that seems to be a combination of conventional theories (including previous studies on emerging markets-based firms) with idiosyncratic elements.

The conscious and unconscious facilitating role of the Chinese government in shaping the internationalization of Chinese MNCs

The main focus of this study is the contrasting mechanisms through which the Chinese government influences the internationalization of Chinese state-owned enterprises (SOEs) and of privately owned enterprises (POEs). The different circumstances created by the Chinese government at the outset of internationalization are found to affect the speed of internationalization and the network positions of the internationalizing firms. The research design is an in-depth multiple-case study comprising two SOEs and two POEs in the process of entering into both developed and developing host countries. The value of this study lies in its identification, theorization and analysis of, on the one hand, the Chinese governmental promotion of SOEs and, on the other hand, the institutional escapism on the part of the POEs. This contributes to a new understanding of the process through which the government takes on the role of ecological management, to which is applied self-theory. This study also identifies the limits of the Uppsala model with regard to the paths to internationalization and proposes a mechanism to explain why these limits exist. The four network positions identified in the study indicate how firms are embedded in the network of the foreign markets and in so doing contributes to filling a gap in the research on the concept of network position as outlined in the revised Uppsala model (of 2009).

Chinese Multinational Firms in Asia and Africa: Relationships With Institutional Actors and Patterns ofHRMPractices

Interest in the internationalization of Chinese firms has soared in recent years. However, studies that compare Chinese multinational corporations (MNCs) in different industries and their human resource management (HRM) remain limited. This study fills this research gap by examining theHRMpractices of ChineseMNCsand the extent to which these are shaped by the institutional factors that are specific to industries. It focuses on the Chinese operations in the South/Southeast Asian and African regions because Chinese firms tend to have various competitive advantages in these regions. The article draws on a number of theoretical perspectives, particularly the political economy and institutional perspectives, to make sense of the different contexts under which ChineseMNCsinvest and operate. It argues that in examining ChineseMNCs, it is important to contemplate the role of the government and a wider range of institutional actors in order to understand how the dynamic interactions of these actors may shape theHRMof these firms with broader economic and social impacts. © 2014 Wiley Periodicals, Inc.

Chinese MNCs’ Preparation for Host‐Country Labor Relations: An Exploration of Country‐of‐Origin Effect

Numerous studies have demonstrated the existence of the country‐of‐origin effect and how this effect interacts with other factors in shaping multinational corporations’ (MNCs’) practices. However, there has been little investigation of different forms of country‐of‐origin effect, the mechanisms through which this effect occurs, or country‐of‐origin effect on MNCs from emerging markets. This study explores how country‐of‐origin effect manifests in Chinese MNCs’ preparation for managing host country labor relations, an important area of human resource management (HRM). Based on a study of 21 Chinese MNCs, we argue that country‐of‐origin effect in relation to Chinese MNCs mainly manifests in two implicit forms, including transfer of management ethos and competitive disadvantage generated from the home base, rather than in the form of direct practice transfer as commonly suggested in the current literature. The major mechanism through which country‐of‐origin effect plays out is the mind‐set of managers, rather than formally established corporate control instruments. © 2014 Wiley Periodicals, Inc.

Chinese Organizations in Sub-Saharan Africa: New Dynamics, New Synergies

Recently, focus on China in the world looks more closely at Chinese MNCs. However, the key role that China now plays in Africa has largely gone unstudied. It is necessary to begin any analysis of Chinese management and organizations in Africa by attempting to understand China’s motives being there without assuming it has the same motivations as the West. Also, more studies are needed to get the knowledge about what happens when Chinese firms go abroad, what Chinese firms take to Africa, and the synergies between Chinese management philosophies and practices and their African partners, staffs and communities.

Chinese multinational corporations in Brazil: strategies and implications in energy and telecom sectors

This study aims to understand how Chinese enterprises acted in Brazilian energy and telecommunication sectors in the past ten years and whether they would be leading to an increase in the asymmetries between Brazil and China. It argues that the asymmetries presented in the relations are due in large part to successful Chinese enterprises' strategies.

Understanding Chinese non‐managerial employees' response to western HRM: changes in turnover intention

Chinese lower‐level employees' perspective on western‐style HRM is neglected. Partly remedying this gap, we report changes in non‐managerial employees' feelings as they move from employment in Chinese‐owned enterprises to that in Anglo‐American‐invested multinational corporations (MNCs). We investigate the employees' appreciation of their enterprise and three work aspects linked both to their enterprise HRM environment and to Chinese cultural emphases. Our findings show that increases in pride in enterprise and in feeling responsible for own work correlate significantly with increased intention to stay, but increases in feeling involved in enterprise decision‐making do not. This suggests that Chinese non‐managerial employees appreciate western‐style HRM practices that resonate with their cultural values but not otherwise. Further, this suggests that Chinese cultural emphases on mianzi, collectivism and power distance remain important for non‐managerial employees and that Chinese MNC unit managers, when introducing HRM practices, need to take account of possible differences in outlook between them and their subordinates.

Chinese Outward Direct Investment Research: Theoretical Integration and Recommendations

AbstractThis article reports a detailed analysis of 138 peer-reviewed articles in 41 journals published in the last 12 years (2001-2012) that focus on Chinese outward foreign direct investment from a theoretical advancement perspective. It assesses how the topic has been explored both conceptually and empirically and identifies the substantive contributions to the literature using a thematic analysis. The article argues that research on the international expansion of Chinese multinational corporations offers a unique opportunity to extend and develop extant theorizing in four primary research streams: the latecomer perspective; Chinese state and government influences; the dynamics of firms and institutions; and the liability of foreignness. Building on the results of this analysis, the article offers five recommendations as promising ways to open up theoretical inquiry: (1) cross-fertilization among the four research streams; (2) integration of resource- and institution-based theories with other theoretical lenses; (3) research on the process dimensions using a longitudinal approach; (4) adoption of multi-levels of analysis; and (5) consideration of the wider emerging market literature.

International human resource management strategies of Chinese multinationals operating abroad

Strategic international human resource management (SIHRM) is crucial for the effective leveraging of human resources in organizations to achieve the desired business strategies. There is a rich collection of studies on western multinational corporations (MNCs) in China, but few studies that explore the SIHRM of Chinese MNCs operating overseas. This study utilizes cross-level, in-depth interviews to analyse SIHRM of three large Chinese multinationals. The paper contributes to literature by addressing two contextual SIHRM issues, namely the characteristics of the SIHRM for Chinese multinationals and how their SIHRM orientation facilitates their international investment and operation. The findings indicate that organizational transformation is the starting point for latecomers matching their international HRM strategies. Their SIHRM approaches, such as forming learning organizations, reliance on host-country nationals, reconciling both home and host-country effects and promoting ‘best practices’, facilitate their international operations.

How large Chinese companies establish international competitiveness in other BRICS: The case of Brazil

Based on an abductive approach, a case study is performed on two Chinese multinational corporations (MNCs) operating in the construction equipment industry. These firms do not yet compete directly with major global firms. The reason for this is that Chinese firms have mainly built up international competitive strength in the low-price segment. A major result is a theory on the initial internationalisation strategy of Chinese firms. The main strategic counter-move by European MNC and other major incumbents seems to be to enter the low-price segment in emerging markets, for example, by acquiring local Chinese brands.

Light‐Touch Integration of Chinese Cross‐Border M&A: The Influences of Culture and Absorptive Capacity

AbstractAs a major entry mode of global strategy of Chinese MNCs, Chinese cross‐border merger and acquisition (M&A) is still a less understood phenomenon, in particular the post acquisition phase. This study contributes to this rising, important and interesting phenomenon utilizing an explorative research method. By integrating synergy potential, culture influences and the learning perspective, we suggest a multilevel perspective in understanding Chinese cross‐border M&A. A novel post acquisition integration approach, namely light‐touch integration, is investigated, and supported by newly assembled empirical evidence in the context of Chinese M&A in Germany. Light‐touch integration essentially synthesizes the preservation and symbiosis integration approaches due to the contextual characteristics of Chinese cross‐border M&A, such as cultural influences and the learning perspective. Understanding the cultural and learning influences can facilitate and smooth the activities involved in the post acquisition phase. The light‐touch integration approach offers ample opportunities for joint collaborations between and mutual benefits for acquiring firms, acquired targets and third party organizations. © 2013 Wiley Periodicals, Inc.