Risk of marginalization in the process of internationalization: A case study of emerging Chinese multinationals

Abstract

Purpose

The purpose of this paper is to explore the process of internationalization and its associated risk of marginalization for the emerging Chinese multinationals; also to examine typical strategies emerging Chinese multinationals employ to deal with this challenge in order to provide insights for Chinese firms that are planning to enter the global market.

Design/methodology/approach

Using a sample of Chinese multinationals that are listed in the Hong Kong Stock Exchange, this study conducts a multiple‐case analysis on three different Chinese multinationals to explore their experiences in the process of internationalization and their unique approaches to the risk of marginalization.

Findings

The results show that internationalized Chinese firms are strengthening their control over core businesses, designing effective corporate governance policy and adjusting their capital structure to increase their actual control in order to minimize the risk of marginalization accompanying their internationalization process.

Originality/value

While an increasing number of Chinese firms are on a fast track of internationalization to enter the global market, the risk of marginalization has become a prominent concern for emerging multinationals and many newly internationalized Chinese firms are faced with a crisis of identity, and consequently they may be marginalized, with the risk of losing control over their own companies and being excluded from major government projects or significant R&D funding opportunities in China. This paper explores Chinese firms' risk of marginalization in their internationalization process and their approaches to dealing with this risk. The paper's findings will provide important insights for Chinese firms that plan to go international and will make an important contribution to the literature and enrich our understanding of Chinese multinationals and their strategic expansion in the era of globalization.

Citation

Ma, Z. and Yang, Z. (2012), "Risk of marginalization in the process of internationalization: A case study of emerging Chinese multinationals", Nankai Business Review International, Vol. 3 No. 1, pp. 52-64. https://doi.org/10.1108/20408741211201917