Chinese Service Multinationals: The Degree of Internationalization and Performance

Wei, Ziyi; Nguyen, Quyen T.K.

Abstract

We investigate the degree of internationalization of Chinese service multinational enterprises (MNEs) and their performance relative to global peers operating in the same industries, using the benchmarking method with the industry financial data. Our theoretical development is based upon Verbeke and Forootan (2012)’s framework, grounded in “new” internalization theory, arguing that an MNE’s financial performance is fundamentally determined by its firm-specific advantages (FSAs). Here FSAs include not only conventional strengths in R&D and brand names, but also the recombination capabilities, which is a higher-order FSA. We theorize that Chinese service MNEs develop FSAs, which are built upon home country-specific advantages (CSAs) and thus their FSAs are home country-bound in nature. They have not yet been able to develop advanced management capabilities through recombination with host CSAs. We empirically examine the largest 500 Chinese service firms. We find that only 23 Chinese service firms are true MNEs, whereas the majority of them are purely domestic firms. The financial performance of Chinese service MNEs is poor relative to global peers. They internationalize mainly through acquisitions of foreign firms, which help them increase their foreign sales, but they are not able to achieve superior performance in overseas operations. We discuss the strategic implications of our findings for managers, public policy makers, and academic research.

Citation

Wei, Z., & Nguyen, Q. T. (2020). Chinese Service Multinationals: The Degree of Internationalization and Performance. Management International Review, 60(6), 869-908. https://doi.org/10.1007/s11575-020-00434-7

• Journal Article Type: Article
• Acceptance Date: Dec 8, 2020
• Online Publication Date: Jan 7, 2021
• Publication Date: Dec 1, 2020
• Deposit Date: Dec 8, 2020
• Publicly Available Date: Dec 2, 2021
• Journal: Management International Review
• Print ISSN: 0938-8249
• Electronic ISSN: 1861-8901
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 60
• Issue: 6
• Pages: 869-908
• DOI: https://doi.org/10.1007/s11575-020-00434-7
• Keywords: Chinese service frms · Degree of internationalization · Multinationality · Financial performance · “New” internalization theory
• Public URL: https://nottingham-repository.worktribe.com/output/5127312
• Publisher URL: https://link.springer.com/article/10.1007/s11575-020-00434-7
• Additional Information: Received: 9 October 2019; Revised: 27 November 2020; Accepted: 8 December 2020; First Online: 7 January 2021; : ; : The authors declare that they have no competing interest.