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A review of institutional influences on the rise of made-in-China multinationals

Xiaohua Yang (University of San Francisco, San Francisco, California, USA)
Clyde D. Stoltenberg (Wichita State University, Wichita, Kansas, USA)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 14 April 2014

2096

Abstract

Purpose

This paper aims to re-examine the role of institutions in the rise of made-in-China multinationals. Specifically, the paper seeks to understand how changes in the global environment, especially global financial crisis, have solidified the Chinese government's role in pushing and encouraging Chinese firms to engage in outbound foreign direct investment (OFDI) activities.

Design/methodology/approach

This is a conceptual paper. The analysis is based on a large number of publicly available sources, including research papers, government documents, and reports. The paper strives to triangulate the validity of the data with multiple sources.

Findings

The study finds that while the role of the state in China has been evolving since the start of the economic reforms in 1978, by no means has it been lessened. Instead, the state has asserted its role specifically to grow Chinese multinationals in size and in number, by leveraging the financial resources accumulated over the last 30 years, by taking advantage of the cheap assets made available globally by the recent financial crisis and by institutionalizing its “Go Global” strategy.

Research limitations/implications

The study implies that the role of the state will be further solidified through China's national goal of enhancing competitiveness via knowledge acquisition through OFDI and simultaneously, multinationals’ OFDI initiatives and strategies will be reinforced by the state's economic policies and goals while their commercial interests will take on an increasing importance in the global marketplace and their behavior will co-evolve with and be reshaped by local, national, and international environments. The paper suggests that future studies employ co-evolutionary theory to investigate the role of state-owned enterprises (especially the functions of their CEOs) as well as non-state actors in shaping the institutional framework in China. Future studies should verify some of the ideas with empirical data and strive to triangulate different data sources to increase data quality.

Practical implications

The study also provides implications to Chinese policy makers on how to balance the government's role as conductor, enabler, protector, and constrainer while allowing Chinese multinationals to integrate into the global market for the benefit of both China and the world economy.

Originality/value

This study represents an original contribution to this topic. The research contributes to the study of globalization of Chinese enterprises by exploring the renewed dynamic relationship between the state and the firm after the 2008 global financial crisis.

Keywords

Acknowledgements

The authors would like to thank the editor-in-chief, Ilan Alon, and three anonymous reviewers for their very valuable comments and suggestions that helped shape this paper. Their thanks also go to the participants in the panel on Chinese OFDI at the 2012 Harvard Conference China Goes Global for their feedback and suggestions that were very useful in the revision of this paper.

This work is dedicated to Professor Clyde Stoltenberg, who was a life-long educator, mentor and friend to many young men and women, including the first author in this paper.

Citation

Yang, X. and D. Stoltenberg, C. (2014), "A review of institutional influences on the rise of made-in-China multinationals", International Journal of Emerging Markets, Vol. 9 No. 2, pp. 162-180. https://doi.org/10.1108/IJoEM-09-2012-0095

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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