Internationalization Of Chinese Firms Research Articles

The longer, the farther? The internationalization of Chinese firms

Purpose This study aims to explore the internationalization of multinational enterprises (MNEs) from China and aims to examine the relationship between Chinese MNEs’ duration of internationalization and export intensity, and the contingent roles of the home country government. Design/methodology/approach By extending the springboard theory with institutional and cost-benefit analyses, the authors elaborate a two-phase framework of internationalization to explain how Chinese MNEs develop their international business under the influences of the home country government. Furthermore, the authors apply the Heckman two-stage method based on a panel data set of 19,994 firm-year observations of Chinese listed firms in 2008–2018 to test the hypotheses. Findings The research findings demonstrate an inverted U-shape relationship between the duration of internationalization and the export intensity of MNEs from China. The export intensity of MNEs from China increases during the initial phase of internationalization, and decreases during the subsequent. A further study reveals that the inverted U-shape of Chinese non-SOEs is steeper than that of SOEs, and this moderating effect is more salient after the Belt and Road Initiative. These results highlight the influence of the home government through state ownership and policies on the inverted U-shaped relationship. Originality/value This study helps to refine the understanding of Chinese MNEs’ global expansion by addressing time as an explicit dimension and revealing the mechanism of state ownership and the home country governmental policy in the dynamic internationalization process.

The Impact of Capital Investment on The Internationalization of Chinese Firms - Moderating Effect of Covid-19 Pandemic

The Impact of Capital Investment on The Internationalization of Chinese Firms - Moderating Effect of Covid-19 Pandemic

Does internationalization matter for corporate social performance of Chinese firms?

AbstractThe purpose of this paper is to explore the relationship between the internationalization of Chinese firms and their corporate social performance (CSP), a topic that remains largely unexplored for Chinese firms. Based on a sample of 325 firms listed on the China A‐shares market from 2010 to 2017, we find a positive relationship between the degree of internationalization (DOI) and CSP of Chinese firms. A positive relationship is also confirmed between corporate financial performance (CFP) and CSP in Chinese firms. However, we find that the interaction between CFP and DOI correlates negatively with CSP, indicating that during internationalization, CFP might not be conducive to improving CSP. Most listed firms in China are state‐owned enterprises (SOEs), and we find that their CSP is inferior to that of non‐SOEs. Finally, we find that hiring one of the four major accounting firms to conduct audits is conducive to a significant improvement in CSP. Managerial and policy implications derived from the results are discussed.

The role of government policies in explaining the internationalization of Chinese firms

Although prior research has recognized the prominent role of governments in stimulating outward foreign direct investment (OFDI) from emerging countries, understanding of the mechanisms through which and the extent to which government policies influence internationalization at the firm level remains rather limited. Drawing from institutional economics and the resource-based view, we examine how OFDI-specific government policies in China influence the decision of Chinese firms to invest abroad. Using a comprehensive dataset of 407,765 firms between 2004 and 2013, our framework indicates that the effectiveness of government policies in stimulating OFDI differs significantly across firms depending on how efficient firms are and their ownership. This study helps us understand the mechanisms through which country-specific institutions in the form of government policies influence foreign investment decisions at the firm level, and how certain contingencies change these effects.

The internationalisation of Chinese firms: Impact of FDI experience on export performance

AbstractThis study investigates the relationship between firms’ export performance and prior investment experience in the corresponding country by using a novel dataset of Chinese firms. We find that a firm's export performance, in terms of value, quantity, unit price level and product varieties, is considerably better in destination countries where the firm has previously invested. The patterns are more pronounced when exporters are non‐state‐controlled or small‐sized firms. Our analysis also shows that such country‐specific outward foreign direct investment experience can facilitate firm exports by bridging country‐pair physical and cultural distances and overcoming contractual barriers in destination countries. The data further imply that the positive effect partly stems from the purpose of local production.

State ownership and early internationalization of Chinese firms: the moderating roles of firm size and the proportion of SOEs

PurposeApplying the institution-based view and the resource-based view, this study explores how state ownership influences early internationalization of emerging market firms, how it interacts with firm size to have an impact and how the proportion of SOEs moderates this interaction effect.Design/methodology/approachBased on a sample of 717 Chinese listed firms, this study uses Poisson regression, ordinary least square regression and Heckman two-stage estimation to analyze the data.FindingsThis study finds state ownership does not influence early internationalization, state ownership and firm size jointly can have a significant impact, and the proportion of SOEs in an industry sector can moderate this interaction effect.Originality/valueThis study enriches our understanding of the impact of home government involvement on internationalization strategies of emerging market firms, contributes to early internationalization research by building the theoretical mechanisms about these direct and interaction effects and by providing empirical results and provides important advices to firm decision-makers and government policymakers. By examining these interaction effects, it also provides a solution to the theoretical conflict created by the two opposing effects of state ownership.

The role of international experience in speed of entry: Empirical evidence from Chinese innovative firms

By analyzing the dynamic path of internationalization, this study attempts to explain the entry mode choice, location choice, and speed of entry in the process of internationalization from the learning results obtained from previous international activities. Our research shows that the speed of the entry process depends on the type of experiential learning generated by the implicit decision-making in the process of Internationalization: the entry mode choice and the market location choice. We find that the experience accumulated in the host country has an inverted U-shaped effect on the speed of entry; while the experience accumulated of the entry mode has a U-shaped impact on the speed of entry. We perform an event history analyses(EHA) on 153 Chinese innovative firms with 905 OFDI observations during the period from 1991 to 2015, and analysis what and why is the paths of internationalization of Chinese firms. We find that Chinese innovative MNEs have more likelihood to choice the entry mode of acquisition and WOS than other entry modes in OFDI activity, and there is a higher probability that the Chinese innovative MNEs choice the market location of developed countries than developing countries in OFDI activity. Most importantly, we find that accumulated experience in host country has an inverted U-shaped impact on the speed of internationalization operation with acquisition mode and the speed of internationalization in developed countries; while accumulated experience in focal entry mode has an U-shaped impect on the speed of internationalization operation with branch or WOS mode and the speed of internationalization in developing countries. This claim is supported by both non-parametric and parametric tests in the EHA. Our research highlights the short-term and long-term consequences of different types of paths associated with the internationalization process.

The degree of internationalization of Chinese Multinationals along the belt and road initiative countries.

This study assesses the degree of internationalization of Chinese firms along the Belt and Road initiative countries. Most of the extant studies of the Belt and Road initiative have been qualitative, and where there have been quantitative studies, they have usually been at the aggregate level, and only a handful have used firm-level data to study initiative. Using a composite measure of the degree of internationalization, DOIBRI, that composed of variables capturing the performance, structural and attitudinal dimensions of internationalization, comparative analysis of State-owned enterprises and privately owned enterprises turned up counter-intuitive results. Firstly, given that state ownership could be positively associated with the degree of internationalization of firms and because of the significance of the Belt and Road initiative, we expected the State-owned enterprises to dominate the DOIBRIrankings. We assessed the firms, and contrary to expectations, privately owned firms had a higher average degree of internationalization. Furthermore, we expected both state-owned enterprises and privately-owned enterprises to have similar levels of psychic dispersion. However, state-owned enterprises were more psychically dispersed. Suggesting that along the belt and road countries, the advantages of state ownership of Chinese multinationals may be attenuated.

Reviewing the research on the internationalization of Chinese firms

Purpose Supplementing a previous review article on the internationalization of Chinese firms (ICF) by Deng (2012) that covers the period 1991–2010, the purpose of this paper is to examine how research on this subject has thematically expanded in recent years, systematically investigating the literature concerning the ICF between 2011 and June 2017 and highlighting the research advancements. Furthermore, it provides impulses for future research and outlines potential avenues for the overall future development of the entire ICF field. Design/methodology/approach Based on a systematic literature review, this paper categorizes the surveys reviewed according to the organizational framework of the research on the ICF provided by Deng (2012). Findings The results indicate that the research on the ICF has become more widespread and mature during the time period investigated. First, there are more articles examining functional management processes of Chinese firms. Consequently, new knowledge exists regarding the role, control and organization of foreign subsidiaries of Chinese enterprises and their host country institutional integration. Second, the state of knowledge regarding the implications of the ICF has increased. It is argued that the future convergence or divergence of the Chinese economic system determines the overall future development of research on the ICF. Originality/value This is the first review paper in the emerging ICF field that consciously continues the work of a previous review article, enabling the tracing of the thematic expansion of research on the ICF.

Domestic Acquisition Experience and the Internationalization of Chinese Firms: The Role of Institutional Heterogeneity

ABSTRACTThe liability of foreignness increases firm risk of doing business abroad. However, it appears not to deter Chinese firms as evidenced by their risky internationalization pattern. This study is concerned with explaining this phenomenon. Drawing on organizational learning and institutional theories, I argue that institutional heterogeneity in China gives firms an opportunity to develop routines to overcome the liability of foreignness through acquisition experience gained outside of their home provinces. Further, I propose that coastal and inland firms draw different routines from their acquisition experiences. I test these arguments on panel data of listed Chinese firms, tracing their acquisition behavior from 2006 to 2015. My analyses suggest that acquisition experience outside of home province matters and that, in the case of inland firms, coastal acquisition experience facilitates subsequent internationalization. The present study contributes to the literature on the internationalization of Chinese firms. It highlights the value of context-specific measures for Chinese management research, sheds light on the functionality of institutional heterogeneity in China, and provides evidence to re-evaluate the riskiness of Chinese firms’ internationalization pattern.

Domestic Acquisitions, Institutional Heterogeneity and the Internationalization of Chinese Firms

Liability of foreignness increases firm risk of doing business abroad. However, it appears not to deter Chinese firms as evidenced by their risky internationalization pattern. This study is concern...

Internationalization and performance: the role of state ownership

ABSTRACTThis article tests the influence of state ownership on internationalization–performance relationship based on Chinese listed manufacturing firms during 2001–2014. The empirical results show that, on average, the internationalization of Chinese firms is negative with performance and state ownership enhances the negative effects of internationalization on performance. The findings highlight the importance of firm-specific characteristics in the examination of the internationalization–performance relationship.

Financial development, ownership and internationalization of firms: evidence from China

PurposeThe purpose of this paper is to examine the relationship between financial development and internationalization of Chinese firms, whether the above relationship could be varied for firms with different kinds of ownership, and the channels through which financial development affects internationalization.Design/methodology/approachThis paper uses a sample of 2,053 firms for the period 2001 to 2013, and applies the methods of ordered logit, logit, and OLS regressions to examine the role of financial development on firms’ internationalization.FindingsThe results show that financial development accelerates the level of international process of Chinese firms, and this effect is stronger for the non-state-owned enterprises (NSOEs) than for SOEs. The authors also document that financial development increases the investment scale of outward foreign direct investment (OFDI). In addition, the evidence on the channels through which financial development affects internationalization indicates that financial development accelerates the level of international process in high-technology industries and industries that are more dependent on external financing, and promotes the technology-seeking OFDI, and these effects are more prominent for NSOEs than for SOEs.Originality/valueFirst, this study examines Chinese firms’ internationalization from the perspective of financial development and focuses on the relationship between financial development and internationalization, and varies this relationship over firms with different kinds of ownership. Second, this study adds to the existing literature by identifying two channels through which financial development has an impact on internationalization, namely, external finance and high-tech intensiveness, and identifies the impact of financial development on technology-seeking OFDI.

Communist Ideological Imprinting and Internationalization: A Study of Chinese Entrepreneurs

We explore how entrepreneurs imprint their organizations, proposing that their imprint serves as an information filter that in turn affects their decision-making and shapes their firm’s strategy. Furthermore, we examine how different types of information diffusion and closure lead to decay and persistence of the imprint and that the rate of imprint decay increases with the credibility of the information source. Empirical investigation of a unique longitudinal dataset of Chinese private entrepreneurs’ from 1993-2012 supports our hypotheses, showing that entrepreneurs communist ideological imprint affects the internationalization of their firms and that a variety of information from the government and different types of information closure affect this relationship. These findings corroborate that there is significant incremental value of examining individuals’ ideological imprint in addition to their current ideology in shaping corporate elites’ decision- making processes. Our study contributes to understanding imprints and their evolution, the political ideology of upper echelons, and internationalization of Chinese firms.

The Internationalization of Chinese Firms and Negative Media Coverage: The Case of Geely's Acquisition of Volvo Cars

Chinese firms are internationalizing at an unprecedented speed. One profound phenomenon linked to this active Chinese firms internationalization process is that the process tends to be confronted with negative media coverage of China and Chinese firms in Western countries. How to understand and cope with the negative image of China and Chinese firms, as they are often seen in the Western media, emerges as a relevant and timely research topic in the study of the internationalization of Chinese firms. The purpose of this article is to stimulate ideas for further research on the relations between the internationalization of Chinese firms and the media coverage. We use the case of Geely's acquisition of Volvo Cars, which was to a large extent negatively reported in the Swedish media during 2008–2013, as inspiration to identify the interesting research themes and questions. Given the increasing anti‐globalization trend, we hypothesize that Chinese firms will have to face up to the reality of negative media coverage in many Western countries for the foreseeable future, at least in the firms’ initial establishment phases. We end our paper with the managerial implications. © 2017 Wiley Periodicals, Inc.

Going global in groups: a relevant market entry strategy?

PurposeThe purpose of this paper is to identify whether the new Chinese phenomenon of going global in groups represents a more advantageous market entry mode than the phenomena considered in previous studies.Design/methodology/approachIn this empirical research paper, the authors draw upon the literature in academic journals and books regarding the Chinese special economic zones overseas to analyze and compare collective internationalization (i.e. going global in groups) with traditional market entry modes as per the ownership, location and internalization paradigm (OLI) and transaction cost approach (TCA).FindingsThe authors identified that financial and diplomatic support provided by the Chinese Government has reinforced internationalization in groups, thereby minimizing some structural risks in host countries. Pre-operational and operating costs have been lowered or shared among group members, and weighted average cost of capital has dropped due to the availability of specific funding lines with subsidized interest rates.Research limitations/implicationsGiven the lack of available literature on the topic, the authors based their study of the collective internationalization of Chinese firms on very few cases, most of which represent market entry in African countries.Practical implicationsThe study calls attention to a new, more efficient and less risky characteristic of international entry modes, which implies that companies can reap multiple benefits by entering markets in global groups.Originality/valueAs literature addressing market entry modes focuses mostly on individual enterprises, this paper contributes to the identification of advantages in collective internationalization.

Internationalization of Chinese Firms: What Role DoesGuanxiPlay for Overcoming Their Liability of Outsidership in Developed Markets?

This article explains how managers of Chinese firms can use guanxi when entering and expanding in developed markets. The empirical basis for the investigation is formed by interviews with 29 managers at 17 Chinese business-to-business firms internationalizing to Europe. The results generated are twofold. On the one hand, existing guanxi was largely irrelevant for initially entering the European market. On the other hand, Chinese firms managed to successfully overcome the liability of outsidership by building new guanxi-like relationships with their Western business network partners after a certain period of time. Six propositions give insights on the process for Chinese firms to become insiders in the business networks of developed countries. The propositions were combined into two comprehensive models that give implications for future research and for management practice. © 2016 Wiley Periodicals, Inc.

Labour Standards Along 'One Belt One Road'

Chinese multinational enterprises (MNEs) are emerging as increasingly influential actors in the global political economy. Since the late 1990s, China has adopted a ‘Going Out’ industrialisation policy entailing the accelerated internationalisation of Chinese firms to acquire assets and expand business operations abroad. The centrepiece of the forthcoming phase of the ‘Going Out’ strategy is the ‘One Belt One Road’ (OBOR or ‘Belt and Road’) initiative, aimed at fostering closer economic connectivity between China and over 60 other countries with an emphasis on regional infrastructure and transportation developments.With the rapid expansion of Chinese outbound investments, there have been growing controversies over the social impacts on host countries. The conduct of Chinese state-owned enterprises and private firms investing along the ‘Belt and Road’ are likely to be subject to ever increasing scrutiny. OBOR has also been seen by some as a geo-political strategy that reflects China’s desire for a bigger role in global affairs. As such, there may be increasing expectations among the international community that China should ensure that its firms act as ‘good corporate citizens’ abroad. Indeed, unfavourable consequences for China’s image have already prompted the government to introduce regulations, guidelines, and policies in recent years that aim to govern the conduct of Chinese MNEs. There has also been an emerging set of corporate social responsibility schemes and codes of conduct adopted by Chinese MNEs and industry groups, often with the involvement of government authorities. This paper addresses a critical issue that arises as to the ways in which the world’s largest industrialising economy, in pursuing a new industrial development strategy that will broaden its role in global markets and production networks as well as its potential geo-political influence, may shape the governance of international labour standards. Could China (including its public and private actors) become a new standard-setter? Will Chinese firms drive a ‘race to the bottom’ along the Belt and Road, especially in those countries with ‘weak governance zones’? What pressures can be brought to bear on Chinese MNEs to comply with various sources of labour standards, whether set by the International Labour Organization, laws of host countries and of China as the home country, trade and investment agreements, and/or industry groups and firms via codes of conduct and certification programmes?

The Effect of Home Country Institutional Constraints on Internationalization of Chinese Firms

Home country institutional environment plays an important role in shaping emerging economy firm’s internationalization activities. While most studies focus on the positive and supportive role of st...

Chinese firms ‘going global’: Recent OFDI trends, policy support and international implications

This article analyzes Chinese foreign direct investment. First, recent empirical trends are explicated, showing that Chinese firms ‘going global’ has taken off, with significantly rising investment even in developed economies. Analyzing the specifics of Chinese outward foreign direct investment (OFDI) also shows that the motives of Chinese firms going abroad are mostly economic. Second, the role of policy support in Chinese OFDI is elucidated, showing that Chinese style internationalization differs from liberal role models. This is explained by the domestic structure of China’s political economy. However, the prevalent image in the West that the internationalization of Chinese firms is mostly policy-driven is erroneous. Thus, third, the role of fragmentation and competition in China’s ‘going global’ strategy is elucidated. In the outlook, it is exemplified that the growing significance of Chinese firms results in a restructuring of global competitive relations, which some Western governments and firms regard with suspicion.