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Post-entry growth in scope and scale among Chinese multinational enterprises: a structural embeddedness explanation

Xuanya Shi (School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, China)
Francis Boadu (School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, China)
Yifei Du (School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, China)

Cross Cultural & Strategic Management

ISSN: 2059-5794

Article publication date: 22 October 2020

Issue publication date: 29 April 2021

216

Abstract

Purpose

Both the scope of postentry growth and the scale of postentry growth are essential for Chinese multinational enterprises' aggressive internationalization. Yet, prior literature has not considered the synergistic approach of postentry growth that seeks the scope of growth and the scale of growth simultaneously. Building upon the embeddedness perspective and the learning view, we address how structural embeddedness directly affects firms' postentry growth in the form of scope and scale and indirectly affects postentry growth via both the scope of growth and the scale of growth. Particularly, we investigate the decreasing mediating effect of the growth's scale on the growth's scope when embeddedness strengthens.

Design/methodology/approach

With a survey data set of 206 Chinese multinational firms from manufacturing and service industries, we conduct structural equation modeling (SEM), partial least squares path modeling (PLS-PM), instantaneous indirect effect assessment and hierarchical linear regression model to test our hypotheses.

Findings

First, Chinese multinational enterprises’ (CMNEs) structural embeddedness is positively related to their scope of postentry growth, while has a U-shaped relationship with their scale of postentry growth. Second, CMNEs' scope of postentry growth mediates the relationship between structural embeddedness and the scale of postentry growth, the mediation effect counts for 33.5% of the over effect. Finally, the indirect effect of structural embeddedness on the scope of postentry growth through the scale of postentry growth is nonlinear. As the structural embeddedness strengthens, the positive indirect effect gradually weakens.

Originality/value

We believe this study further connects core international business research on postentry growth to the fast-growing literature on emerging markets multinational enterprises' internationalization. In addition, we undertake an initial effort in addressing an important gap in the literature: how structural embeddedness matters to firms' postentry growth. Moreover, this study finds important evidence to support the direct and indirect effect of structural embeddedness on postentry growth.

Keywords

Acknowledgements

This paper forms part of a special section “The Belt-and-Road Initiative in the New Era of Globalization: Unique Opportunities and Challenges to MNEs”, guest edited by Peter Ping Li, Peter J. Williamson, Abby Jingzi Zhou and Rosalie L. Tung.We acknowledge the detailed guidance and comments offered to us by the Cross Cultural and Strategic Management Special Issue editors and reviewers to improve the paper. We acknowledge Zheng Tan for his assistance at the early stages of the project and Tony W. Tong for support in the later stages.Funding: This paper was supported by National Natural Science Foundation of China, No. 71672021.

Citation

Shi, X., Boadu, F. and Du, Y. (2021), "Post-entry growth in scope and scale among Chinese multinational enterprises: a structural embeddedness explanation", Cross Cultural & Strategic Management, Vol. 28 No. 2, pp. 235-264. https://doi.org/10.1108/CCSM-12-2019-0231

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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