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Technological innovation as a source of Chinese multinationals’ firm-specific advantages and internationalization

Shaowei He (Northampton Business School, University of Northampton, Northampton, UK)
Zaheer Khan (Kent Business School, University of Kent, Canterbury, UK)
Yong Kyu Lew (College of Business Administration, Hankuk University of Foreign Studies, Seoul, The Republic of Korea)
Grahame Fallon (Brunel Business School, Brunel University, London, UK)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 24 January 2019

Issue publication date: 15 February 2019

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Abstract

Purpose

The purpose of this paper is to examine how innovation-related firm-specific ownership advantage (FSA) plays a role in developing the competitive advantage of Chinese multinationals when they internationalize.

Design/methodology/approach

Based on a review of the existing literature concerning foreign direct investment by emerging economy multinational enterprises (EMNEs), the authors identify that numerous studies explain this phenomenon on the basis of their location-bound country-specific advantages. However, such views do not fully explain the key underlying factors behind the rapid rise and success of many EMNEs as these firms rapidly internationalize and develop global competitiveness in developed markets. The current research explores three leading innovative Chinese EMNEs from the engineering sector: BYD, Sany Heavy Industry and CSR China.

Findings

The authors find that EMNEs’ knowledge, and particularly their innovation-creating technological knowledge, has contributed greatly to their successful internationalization. The illustrative cases show that the three firms have now moved beyond the infant to the mature stage of EMNE development through developing their technological knowledge in order to realize FSA through internationalization. This study helps in contributing fresh reflections to the continuing debate concerning the causes of internationalization and global competitive development by EMNEs and the role of their FSAs in these processes.

Originality/value

This is one of the few studies which have demonstrated that some of the EMNEs do possess firms’ specific advantage which helps explain their innovative capabilities, competitive advantages and subsequent internationalization patterns.

Keywords

Citation

He, S., Khan, Z., Lew, Y.K. and Fallon, G. (2019), "Technological innovation as a source of Chinese multinationals’ firm-specific advantages and internationalization", International Journal of Emerging Markets, Vol. 14 No. 1, pp. 115-133. https://doi.org/10.1108/IJOEM-02-2017-0059

Publisher

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Emerald Publishing Limited

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