Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-22T00:28:32.238Z Has data issue: false hasContentIssue false
  • English
  • Français

The Internationalization of Chinese Firms: A Case forTheoretical Extension?1

Published online by Cambridge University Press:  02 February 2015

John Child  and
Suzana B. Rodrigues
John Child
Affiliation:
University of Birmingham, UK
Suzana B. Rodrigues
Affiliation:
University of Birmingham, UK
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper examines the patterns of, and motives for, internationalizationby prominent market-seeking Chinese firms. Case studies of these firmsindicate that they are seeking technological and brand assets to create acompetitive position in international markets. While mainstream theory tendsto assume that firms internationalize to exploit competitive advantages,Chinese firms are generally making such investments in order to addresscompetitive disadvantages. They are engaging in ‘inward’internationalization by means of original equipment manufacture (OEM) andjoint venture partnerships, and ‘outward’ internationalization by means ofacquisition and organic expansion abroad. Each of these routes offerscertain benefits coupled with its own challenges or risks. The paperconcludes that the Chinese case offers an opportunity to extend presenttheorizing in four primary areas concerning the latecomer perspective andcatch-up strategies, institutional analysis with reference to the role ofgovernment, the relations between entrepreneurs and institutions, and theliability of foreignness.

Type
Articles
Information
Management and Organization Review , Volume 1 , Issue 3 , November 2005 , pp. 381 - 410
Copyright
Copyright © International Association for Chinese Management Research 2005

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

[1]

The authors wish to thank Yadong Luo, MOR Senior Editor, and reviewersfor their insightful and positive comments on an earlier version ofthis paper.

References

Asia Pacific Bulletin (2004). ‘Is China becoming a global investor?’ September 10, www.asiapaci ficbusiness.ca.Google Scholar
Barney, J. B., (1991). Firm resources and sustained competitive advantage’. Journal of Management, 17, 99–120.Google Scholar
Boisot, M. (2004). Notes on the internationalization of Chinese firms. Unpublished paper, Open University of Catalonia, Barcelona, Spain.Google Scholar
Boisot, M. and Child, J. (1996). ‘From fiefs to clans and network capitalism: Explaining China's emerging economic order’. Administrative Science Quarterly, 41, 600–28.10.2307/2393869Google Scholar
Brown, R. A. (Ed.) (1995). Chinese Business Enterprise in Asia. London: Routledge.Google Scholar
Buckley, P. J. and Casson, M. C. (1976). The Future of the Multinational Enterprise. London: Macmillan.NOGoogle Scholar
Buckley, P. J. and Ghauri, P. N. (Eds.) (1999). The Internationalization of the Firm. London: Thomson Business Press.Google Scholar
Buckley, P.J. and Mirza, H. (1988). ‘The strategy of Pacific Asian multinationals’. Pacific Review, 1, 50–62.10.1080/09512748808718749Google Scholar
Business Week (2002). ‘High tech in China: Is it a threat to Silicon Valley?’ October 28, 44–56.Google Scholar
Business Week (2003). ‘Jumping the hurdles at Huawei’. December 22, 22–3.AMBIGUOUS (1064 citations)Google Scholar
Business Week (2004a). ‘China goes shopping’. December 20, 30–32.AMBIGUOUS (1029 citations)Google Scholar
Business Week (2004b). ‘Big Blue's bold step into China’. December 20, 33–4.AMBIGUOUS (1500 citations)Google Scholar
Business Week (2004c). ‘China's power brands’. November 8, 44–50.AMBIGUOUS (856 citations)Google Scholar
Cai, K. G. (1999). ‘Outward foreign direct investment: A novel dimension of China's integration into the regional and global economy’. China Quarterly, 160, 856–80.10.1017/S0305741000001363Google Scholar
Caves, R. E. (1971). ‘International corporations: The industrial economics of foreign investment’. Economica, 38, 1–17.10.2307/2551748Google Scholar
Chen, M. (2004). Asian Management Systems. London: Thomson, 2nd edition.Google Scholar
Chen, X-P. and Chen, C. C. (2004). ‘On the intricacies of the Chinese guanxi: A process model of guanxi development’. Asia Pacific Journal of Management, 21, 305–24.10.1023/B:APJM.0000036465.19102.d5Google Scholar
Child, J., Faulkner, D. and Pitkethly, R. (2001). The Management of International Acquisitions. Oxford: Oxford University Press.Google Scholar
Child, J., Ng, S-H. and Wong, C. (2002). ‘Psychic distance and internationalization: A critical examination’. International Studies of Management and Organization, 32, 36–56.Google Scholar
Child, J. and Tse, D. K. (2001). ‘China's transition and its implications for international business’. Journal of International Business Studies, 32, 5–21.10.1057/palgrave.jibs.8490935Google Scholar
Child, J. and Yan, Y. (2001). ‘National and transnational effects in international business: Indications from Sino-foreign joint ventures’. Management International Review, 41, 53–75.Google Scholar
Chung, O. (2004). ‘Outward FDI tops US$33bn’. The Standard, October 7, www.thestandard.com.hk.Google Scholar
Deng, P. (2004). ‘Outward investment by Chinese MNCs: Motivations and implications’. Business Horizons, 47, 8–16.10.1016/S0007-6813(04)00023-0Google Scholar
Dore, R. (1973). British Factory - Japanese Factory. London: Allen & Unwin.Google Scholar
Dunning, J. H. (1981). International Production and the Multinational Enterprise. London: Allen & Unwin.Google Scholar
Dunning, J. H. (2001). ‘The eclectic (OLI) paradigm on international production: Past, present and future’. International Journal of the Economics of Business, 8, 173–90.10.1080/13571510110051441Google Scholar
Dunning, J. H. and Narula, R. (Eds.) (1996). Foreign Direct Investment and Governments: Catalysts for Economic Restructuring. London: Routledge.Google Scholar
Fang, P. (2002). The Refrigerator Industry in China and Strategies for Chinese Companies. Unpublished MBA dissertation, University of Birmingham.Google Scholar
Financial Times (2004a). ‘Chinese carmaker negotiates for stake in MG Rover’. November 22, 2.AMBIGUOUS (636717 citations)Google Scholar
Financial Times (2004b). ‘Lenovo buys IBM's PC unit for $1.75bn’. December 9, 21.AMBIGUOUS (636717 citations)Google Scholar
Financial Times (2004c). ‘IBM brand loyalty holds key for Lenovo’. December 9, 26.AMBIGUOUS (636717 citations)Google Scholar
Finfacts (2005). ‘China's exports surge by 32.7% in first half of 2005’. www.finfacts.com, July 13.AMBIGUOUS (697200 citations)Google Scholar
Garnaut, R. and Song, L. (Eds.) (2004). China's Third Economic Transformation: The Rise of the Private Economy. London: Routledge Curzon.Google Scholar
Granovetter, M. (1985). ‘Economic action and social structure: The problem of embeddedness’. American Journal of Sociology, 91, 481–510.10.1086/228311Google Scholar
Gulati, R., Nohria, N. and Zaheer, A. (2000). ‘Strategic networks’. Strategic Management Journal, Special Issue, 21, 203–15.10.1002/(SICI)1097-0266(200003)21:3<203::AID-SMJ102>3.0.CO;2-K3.0.CO;2-K>Google Scholar
Guthrie, D. (2005). ‘Organizational learning and productivity: State structure and foreign investment in the rise of the Chinese corporation’. Management and Organization Review, 1, 165–95.10.1111/j.1740-8784.2005.00008.xGoogle Scholar
Hennert, J-F. (2001). ‘Theories of the multinational enterprise’. In Rugman, A. M. and Brewer, T. L. (Eds.), The Oxford Handbook of International Business (pp. 127–49). Oxford: Oxford University Press.Google Scholar
Hitt, M. A., Ahlstrom, D., Dacin, M. T., Levitas, E. L. and Svobodina, L. (2004). ‘The institutional effects on strategic alliance partner selection in transition economies: China vs. Russia’. Organization Science, 15, 173–85.10.1287/orsc.1030.0045Google Scholar
Hitt, M. A., Ireland, R. D., Camp, S. M. and Sexton, D. L. (2001). ‘Strategic entrepreneurship: Entrepreneurial strategies for wealth creation’. Strategic Management Journal, Special Issue, 22, 479–91.10.1002/smj.196Google Scholar
Huang, Y. (2003). Selling China: Foreign Direct Investment during the Reform Era. Cambridge: Cambridge University Press.Google Scholar
Inkpen, A. C. (1995). The Management of International Joint Ventures: An Organizational Learning Perspective. London: Routledge.Google Scholar
Johanson, J. and Vahlne, J. E. (1977). ‘The internationalization process of the firm. A model of knowledge development and increasing foreign market commitments’. Journal of International Business Studies, 8, 22–32.Google Scholar
Johanson, J. and Wiedersheim-Paul, F. (1975). ‘The internationalization of the firm. Four Swedish cases’. Journal of Management Studies, 12, 305–22.10.1111/j.1467-6486.1975.tb00514.xGoogle Scholar
Kiran, V. B. (2004). Haier: Developing a Global Brand. Case #304-264-1, Hyderabad: ICFAI Business School, Case Development Centre.Google Scholar
Kumar, K. and Mcleod, M. G. (Eds.) (1981). Multinationals from Developing Countries. Lexington, MA: Lexington Books.Google Scholar
Lall, S. (1984). The New Multinationals. New York: Wiley.Google Scholar
Lecraw, D.J. (1977). ‘Direct investment by firms from less developed countries’. Oxford Economic Papers, 29, 442–57.Google Scholar
Lecraw, D.J. (1993). ‘Outward direct investment by Indonesian firms: Motivation and effects’. Journal of International Business Studies, 24, 589–600.10.1057/palgrave.jibs.8490247Google Scholar
Lewin, A. Y., Long, C. P. and Carroll, T. N. (1999). ‘The coevolution of new organizational forms’. Organization Science, 10, 535–50.10.1287/orsc.10.5.535Google Scholar
Marsh, P. (2005). ‘Rise in plant automation improves China's competitive advantage’. Financial Times, June 3, 12.Google Scholar
Matthews, J. A. (2002). ‘Competitive advantages of the latecomer firm: A resource-based account of industrial catch-up strategies’. Asia Pacific Journal of Management, 19, 467–88.10.1023/A:1020586223665Google Scholar
McDougall, P. P. and Oviatt, B. M. (2000). ‘International entrepreneurship: The intersection of two research paths’. Academy of Management Journal, 43, 902–6.10.2307/1556418Google Scholar
McGregor, R. and Guerrera, F. (2004). ‘Chinese companies acquire a taste for western targets’. Financial Times, October 19, 20.Google Scholar
McGregor, R. (2005). ‘Spending spree leaves Beijing nerves frayed’. Financial Times, March 8, 12.Google Scholar
Meyer, J. W. and Scott, W. R. (Eds.) (1983). Organizational Environments: Ritual and Rationality. Thousand Oaks, CA: Sage.Google Scholar
Meyer, M. W. and Lu, X. (2004). ‘Managing indefinite boundaries: The strategy and structure of a Chinese business firm’. Management and Organization Review, 1, 57–86.Google Scholar
Ministry of Commerce (2005). China Outbound Investments Statistics Report for 2004. Beijing: Ministry of Commerce and State Statistical Bureau.Google Scholar
Moingeon, B. and Edmonson, A., (Eds.) (1996). Organizational Learning and Competitive Advantage. Thousand Oaks, CA: Sage.Google Scholar
Nolan, P. (2001). China and the Global Economy. Basingstoke, UK: Palgrave.Google Scholar
Peerenboom, R. (2001). ‘Globalization, path dependency and the limits of law: Administrative law reform and the rule of law in the People's Republic of China’. Berkeley Journal of International Law, 19, 161–264.Google Scholar
Peng, M. W. (2000). Business Strategies in Transition Economies. Thousand Oaks, CA: Sage.Google Scholar
Peng, M. W. (2005). ‘Perspectives - from China strategy to global strategy’. Asia Pacific Journal of Management, 22, 123–41.10.1007/s10490-005-1251-3Google Scholar
Quan, Y. (2001). ‘Access to the WTO and internationalization strategy of Chinese companies’. Enterprise Studies, 8, 12–24.Google Scholar
Rodrigues, S. B. and Child, J. (2003). ‘Co-evolution and transformation in times of deconstruction: A dynamic multi-level process’. Journal of Management Studies, 40, 2137–62.10.1046/j.1467-6486.2003.00415.xGoogle Scholar
Safarian, A. E. (2003). ‘Internalization and the MNE: A note on the spread of ideas’. Journal of International Business Studies, 34, 116–24.10.1057/palgrave.jibs.8400011Google Scholar
Scott, W. R. (1995). Institutions and Organizations. Thousand Oaks, CA: Sage.Google Scholar
Simonin, B. L. (2004). An empirical investigation of the process of knowledge transfer in international strategic alliances’. Journal of International Business Studies, 35, 407–27.10.1057/palgrave.jibs.8400091Google Scholar
The Economist (2004). ‘Chinese business: Champ or chump?’ December 11th, 68–9.AMBIGUOUS (672 citations)Google Scholar
The Economist (2005). ‘The dragon tucks in’. July 2, 70–2.AMBIGUOUS (808 citations)Google Scholar
The Guardian (2004). ‘Notebook: Rover is more than a Chinese whisper from a deal’. November 23, 17.AMBIGUOUS (636717 citations)Google Scholar
Ting, W. (1985). Business and Technological Dynamics in Newly Industrializing Asia. Westport, CN: Quorum Books.Google Scholar
Toyne, B. and Nigh, D. (1998). ‘A more expansive view of international business’. Journal of International Business Studies, 29, 863–76.10.1057/palgrave.jibs.8490056Google Scholar
Tseng, C-S. (1994). ‘The process of internationalization of PRC multinationals’. In Schultte, H. (Ed.). The Global Competitiveness of the Asian Firm. Basingstoke, UK: Macmillan.Google Scholar
UNCTAD (United Nations Conference on Trade and Development) (2004). World Investment Report 2004. New York: United Nations.Google Scholar
Warner, M., Ng, S-H. and Xu, X. (2004). “‘Late development” experience and the evolution of transnational firms in the People's Republic of China’. Asia Pacific Business Review, 10, 324–45.10.1080/1360238042000264397Google Scholar
Wells, L. T. Jr. (1983). Third World Multinationals: The Rise of Foreign Direct Investment from Developing Countries. Cambridge, MA: MIT Press.Google Scholar
Wesson, T. (1999). A model of asset-seeking foreign direct investment driven by demand conditions’. Canadian Journal of Administrative Sciences, 16, 1–10 Google Scholar
Williams, F. (2005). ‘China overtakes Japan as third largest exporter’. Financial Times, April 15, 9.Google Scholar
Yeung, H. W-C. and Olds, K. (Eds.) (2000). Globalization of Chinese Business Firms. New York: St. Martin's Press.Google Scholar
Zaheer, S. (1995). ‘Overcoming the liability of foreignness’. Academy of Management Journal, 38, 341–63.10.2307/256683Google Scholar
Zeng, M. and Williamson, P.J. (2003). ‘The hidden dragons’. Harvard Business Review, October, 92–9.Google Scholar
Zhang, H.Y and Van Den Bulcke, D. (1996). ‘International management strategies of Chinese multinational firms’. In Child, J. and Lu, Y., (Eds.) Management Issues in China: International Enterprises (pp. 141–64). London: Routledge.Google Scholar
Zhang, J. (2005). ‘China's corporate cost advantage is a myth’. Financial Times, April 29, 19.Google Scholar
Zhang, W. (2003). Brand value and strategy. Working Paper Guanghua School of Management, Peking University, China.Google Scholar