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Multinationality and performance effects: an integrated theory of new patterns of multinationality and home political influence

I-Fan Yen (International Business Faculty, Beijing Normal University – Zhuhai Campus, Zhuhai, China)
Hsin-Mei Lin (Department of International Business Studies, National Chi Nan University, Puli, Taiwan)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 5 October 2020

Issue publication date: 15 March 2021

Abstract

Purpose

This paper aims to develop an integrated perspective on the relationship between multinationality and performance in the outward foreign direct investment (OFDI) of Chinese firms. The study not only represents contrasting OFDI patterns – namely, born global-natured multiple synchronous foreign investments versus conventional internationalization process (IP)-natured steady increasing foreign investments – but also contributes to understanding the extent to which explanations of home political influence need to be rooted within the general theory of multinationality.

Design/methodology/approach

By testing a comprehensive panel observation of 8,635 OFDI projects from 1991-2016 in China, this study found that multinationality with the new pattern of multiple synchronous OFDIs has a superior performance effect compared with the conventional pattern of steady increasing OFDIs.

Findings

This study also finds a positive relationship between multinationality (international diversification and home political influence) and the performance effect with the new pattern of multiple synchronous OFDIs, as well as a partial positive relationship between multinationality and the performance effect with the conventional pattern of steady increasing OFDIs.

Research limitations/implications

The study extends the understanding of the performance effects of Chinese multinational enterprises, which may benefit more from the new pattern of multiple synchronous OFDIs than from the conventional pattern of steady increasing OFDIs when the home-country institution is strongly positioned.

Originality/value

This paper concludes that multinationality needs an integrated framework that accounts for the new pattern of OFDI and the influence of diversification and home politics, particularly for the emerging country, China.

Keywords

Acknowledgements

The authors would like to thank the editors and the reviewers for their constructive comments and suggestions regarding the earlier drafts of this study. The research and related studies are supported by the Guangdong Youth Innovation Talents Project (grant number: 201912023QX), the Program for Research Development of Beijing Normal University, Zhuhai, China and the Ministry of Science and Technology from Taiwan..

Citation

Yen, I.-F. and Lin, H.-M. (2021), "Multinationality and performance effects: an integrated theory of new patterns of multinationality and home political influence", Chinese Management Studies, Vol. 15 No. 1, pp. 155-181. https://doi.org/10.1108/CMS-12-2019-0441

Publisher

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Emerald Publishing Limited

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