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Book part
Publication date: 10 December 2018

Kai Jia, Martin Kenney and John Zysman

The recent emergence of Chinese digital platform firms, whose size rivals that of the US platform giants, has attracted much popular interest. Given the size and…

Abstract

The recent emergence of Chinese digital platform firms, whose size rivals that of the US platform giants, has attracted much popular interest. Given the size and increasing technical sophistication of these firms, there has been increasing interest in whether they have developed sufficient capacities and resources to become global-class competitors for the reigning US platform giants. The authors assembled a database of all overseas operations of the Chinese platform firms. Nine of them have foreign operations, with Tencent and Alibaba being the most important offshore investors. The authors describe the globalization patterns of these firms and analyze the strengths and obstacles to their globalization. Their globalization has proceeded on a number of vectors: first, these firms, with a few exceptions, when they have global strategies, have largely invested in firms with useful technology or content. One common strategy has been to follow Chinese customers abroad. Second, Chinese firms have made equity investments in a number of foreign Internet firms. And yet, in nearly all foreign markets, Chinese websites and apps still trail the US firms in market share and salience. Finally, Chinese investments are concentrated in proximate countries. Chinese platform firms, while having some state-of-the-art technologies, have a far smaller foreign presence than their US competitors do. Finally, the authors consider the implications of their research for discussions of whether emerging nation multinational firms require new theories for explaining their globalization.

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International Business in the Information and Digital Age
Type: Book
ISBN: 978-1-78756-326-1

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Book part
Publication date: 11 November 2014

Chang Liu, Zijie Li, Yi Li and Lin Cui

This paper seeks to provide an understanding of the relationship between the management control policy of emerging economy (EE) firms and the knowledge transfer with the…

Abstract

Purpose

This paper seeks to provide an understanding of the relationship between the management control policy of emerging economy (EE) firms and the knowledge transfer with the acquired firm, as well as the mechanism by which specific management control policy facilitates knowledge transfer with the acquired firms.

Design

Employing an organizational learning theory, this paper examines the knowledge transfer from acquired firms to acquiring EE firms through multiple-case study of three EE firms.

Findings

Based on organizational learning theory and the results of case studies, this paper finds that the cooperation and willingness of employees in the acquired firm and language barriers are the main factors influencing the relationship between management control policy and the parent company’s knowledge transfer process.

Research implication

This study sheds light on cross-border knowledge transfer to EE firms from an organizational learning perspective and broadens the understanding of post-acquisition knowledge transfer in an emerging market context.

Practical implications

This study suggests that the low-level management control facilitates knowledge transfer from acquired firms. This is especially true when the parent company from the EE has limited learning experience and faces substantial language barriers between itself and its acquired firm.

Originality

This paper extends existing research by exploring how low-level control of acquired firms in developed markets facilitates knowledge transfer of EE firms after cross-border acquisition. Future research can extend this line of research by examining the knowledge transfer mechanism of EE firms through qualitative and quantitative methods.

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Emerging Market Firms in the Global Economy
Type: Book
ISBN: 978-1-78441-066-7

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Book part
Publication date: 25 October 2014

Simona Gentile-Lüdecke

The chapter looks at two recent acquisitions by Chinese companies of German firms operating in the automotive sector. In both cases it was the target firm that initiated…

Abstract

Purpose

The chapter looks at two recent acquisitions by Chinese companies of German firms operating in the automotive sector. In both cases it was the target firm that initiated the process, intentionally selling to a Chinese strategic investor. The main purpose of the chapter is to examine the main motivations that induce developed country MNEs to deliberately search for a buyer in China.

Methodology

The chapter uses a case-study approach. Interviews were conducted with the managers that followed the entire process of sale and who were responsible for the search and the selection of a strategic investor in China.

Findings

Empirical findings show that major drivers in opting for Chinese investors are the potential synergies generating from resource redeployment, the ability of the acquired firm to maintain its autonomy and the opportunity to expand into the Chinese market.

Research implications

The cases analysed show that developed country firms may take a proactive role in China in order to address their institutional-based disadvantages and to reduce and eliminate the liability of foreignness they may confront there. What is important is strong core competitiveness on their side, which can ensure their operational autonomy, such as technological leadership and superior quality and solid development. The policy implications are relevant, because in the current particular situation where many companies in Europe turn for sources of capital to emerging market firms, Chinese investors can facilitate target companies’ growth, with a positive impact for the local economy.

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Multinational Enterprises, Markets and Institutional Diversity
Type: Book
ISBN: 978-1-78441-421-4

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Article
Publication date: 3 July 2009

Sung C. Bae

The purpose of this paper is to empirically examine the relation between financial leverage and investment opportunities of Chinese industrial firms, which operate in a…

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1437

Abstract

Purpose

The purpose of this paper is to empirically examine the relation between financial leverage and investment opportunities of Chinese industrial firms, which operate in a vastly different financial environment than USA and Japanese firms.

Design/methodology/approach

Multivariate regression analysis is performed using four versions of debt‐equity ratio as dependent variable to extensive firm‐level data for the 2000‐2004 period.

Findings

The market total debt‐equity (MTDE) ratios of Chinese firms are significantly negatively related to their investment opportunities, indicating that Chinese firms with higher investment opportunities tend to borrow less. The results, however, reveal that the financing‐investment relation is sensitive to the approach used to measure financial leverage. The results further show that long‐term debt‐equity ratios of Chinese firms are not significantly related to their investment opportunities, suggesting that corporate long‐term debt has a minimal role in the leverage‐investment relation for Chinese firms.

Practical implications

The present study opens for a further research on the determinants of the negative relation between financial leverage and investment opportunities of Chinese firms documented in this study. For this line of future research, several unique features of Chinese markets including non‐tradable shares, domestic vs foreign shares, high degree of information asymmetry need to be taken into account.

Originality/value

The present study extends and updates the existing literature on the relation between financial leverage and investment opportunities of Chinese firms by providing new and concrete evidence from extensive data over a more recent period.

Details

Managerial Finance, vol. 35 no. 8
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 20 April 2015

Philippe Gugler and Laura Vanoli

The purpose of this paper is to focus on Chinese firms’ innovation processes that are induced by foreign direct investment abroad. The study uses a patent and citation…

Abstract

Purpose

The purpose of this paper is to focus on Chinese firms’ innovation processes that are induced by foreign direct investment abroad. The study uses a patent and citation analysis to examine the extent to which investments abroad contribute to enhancing these firms’ innovative capabilities. More specifically, this study focusses on the role of foreign location competitiveness as an asset to provide technological capabilities to Chinese affiliates.

Design/methodology/approach

Patents are good indicators of firms’ innovative capabilities. Moreover, patents allow to track the inter-firm knowledge transfer through the citations of patents on which they are based. The authors use an OECD patent database called “OECD REGPAT July 2013” that compiles patents registered with the European Patent Office (EPO) over the period from 1986 to 2013. The authors focus the analysis on patents registered by Chinese multinational enterprises’ (MNEs) based in Europe because the authors assume inter alia that innovations patented by Chinese affiliates in Europe are registered with the EPO. The sample comprises 3,010 patents involving 5,749 citations that the authors have individually examined.

Findings

The findings suggest that Chinese MNEs ability to generate innovation based on their own knowledge is low, with a self-citation rate of approximately 4 percent. Patents by Chinese MNEs are largely based on foreign patents, especially from developed economies (at least 90 percent). The citation analysis also suggests that 39.2 percent of citations represent domestic firms in the local recipient country. This subgroup of citations is categorized as follows: 1.04 percent are M&A linkages, 13.8 percent are cluster linkages, and 24.36 percent are localization linkages. The remaining 60.8 percent of the total sample demonstrates that firms do not necessarily need to be collocated in foreign locations with domestic firms to exchange assets.

Research limitations/implications

Patent and citation analysis considers only a part of the inter-firm knowledge diffusion. Some innovations are not patented and tacit knowledge diffusion is not observable. Moreover, the analysis focusses only on Chinese outward foreign direct investment to Europe, but a large part of knowledge is accumulated in China thanks to inward foreign direct investment.

Originality/value

Many scholars have scrutinized emerging markets multinational enterprises’ strategic asset-seeking investments abroad that are designed to upgrade the companies’ technological capabilities (Cui and Jiang, 2009; Zhang and Filippov, 2009; Huang and Wang, 2013; Amighini et al., 2014; De Beule et al., 2014; Nicolas, 2014). However, few studies analyze the results of these strategies in terms of innovation output.

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International Journal of Emerging Markets, vol. 10 no. 2
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 9 January 2009

Nir Kshetri

China has followed an unique transition from central planning to a market economy. The purpose of this paper is to examine how China's unique blend of capitalism and…

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2617

Abstract

Purpose

China has followed an unique transition from central planning to a market economy. The purpose of this paper is to examine how China's unique blend of capitalism and socialism has influenced Chinese firms’ market orientation.

Design/methodology/approach

Broadly speaking this paper's methodological approach can be described as a positivistic epistemology.

Findings

The paper provides insights into how Chinese institutions facilitate or hinder firms’ market orientation practices through direct effect, externality effect and indirect causal chains. The central theme is that, compared with other countries, China's unaltered political institutions and newly created market institutions have led to unique roles of coercive, normative and mimetic pressures in the diffusion of market orientation among Chinese firms. Especially, regulative institutions’ influence on other institutions is more salient in China than in many other countries.

Research limitations/implications

A lack of primary data and empirical documentation and a lack of in‐depth treatment of some of the key issues are major limitations here.

Practical implications

The paper analyses institutional pressures facing firms operating in China and their variation across different types of firms. An understanding of these pressures is essential to devise market‐oriented approaches in the country. It also examines different institutional factors (e.g. Chinese professional associations) that influence a firm's capability to implement market‐oriented practices.

Originality/value

This paper's greatest value stems from the fact that it employs institutional theory as a lens to understand firms’ market orientation. The institutions‐market orientation nexus is a very important but highly underexamined subject.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 21 no. 1
Type: Research Article
ISSN: 1355-5855

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Article
Publication date: 11 April 2018

Kareen Brown, Fayez A. Elayan, Jingyu Li and Zhefeng Liu

The purpose of this paper is to investigate whether US regulatory actions around reverse mergers (RM) have exerted any spillover effects on the Chinese firms listed in…

Abstract

Purpose

The purpose of this paper is to investigate whether US regulatory actions around reverse mergers (RM) have exerted any spillover effects on the Chinese firms listed in China and whether Chinese firms have exhibited lower financial reporting quality than their US counterparts.

Design/methodology/approach

To test the possible spillover effect, this paper calculates three-day cumulative average abnormal returns (CAAR) and the aggregate CAAR for a series of US regulatory actions in 2010 and 2011. The study then compares the accrual quality, conditional conservatism, and information content of accruals of Chinese firms and US firms.

Findings

The paper documents a spillover effect of US actions around RM on Chinese stocks listed in China. Overall results do not support the perception that Chinese firms have lower financial reporting quality than their US counterparts.

Research limitations/implications

While this study provides evidence consistent with investors perceiving poor financial reporting quality among Chinese firms, that perception is not justified by empirical evidence.

Practical implications

Investors need not be overly concerned about the financial reporting quality among the Chinese firms when they make asset allocation decisions.

Social implications

A reality check is important given that perceptions may be outdated, biased, misleading, and costly.

Originality/value

This study puts the financial reporting quality of Chinese firms into perspective helping global investors assess information risk for optimal resource allocation.

Details

China Finance Review International, vol. 8 no. 4
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 2 September 2013

Yang Yang, Xiaohua Yang and Barry W. Doyle

There has been a surge of overseas investment from China, both to developing and developed countries. However, there is limited understanding of the impact the…

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1151

Abstract

Purpose

There has been a surge of overseas investment from China, both to developing and developed countries. However, there is limited understanding of the impact the internationalization of these firms has on their value creation. This paper seeks to draw on the reconciled FSA/CSA framework with Dunning's four motives to differentiate two types of FDI: traditional FDI and strategic asset-seeking FDI. Further, the paper draws on Verbeke's FSA/CSA recombination process model to analyze the differentiated value creation of traditional FDI and strategic asset-seeking FDI for the Chinese MNEs.

Design/methodology/approach

The paper adopts event study methodology to measure the value created by Chinese MNE's FDI projects and hierarchical linear regression to test the hypotheses. The sample consists of 121 FDI projects publicly announced by Chinese listed companies during 2001-2009.

Findings

Both traditional and strategic asset-seeking FDI create value and traditional FDI creates more value than strategic asset-seeking FDI for Chinese MNEs. In addition, the paper empirically demonstrates that traditional FDI into developing countries creates more firm value than traditional FDI into developed countries or strategic asset-seeking FDI into developed countries.

Originality/value

This research makes the following original contributions: it contributes to the growing body of literature on internationalization of Chinese firms by investigating whether international expansion creates firm value and how the alignment between types of FDI and location strategies influences firm value creation; the study contributes to the literature by providing insights into the performance implications of emerging economy enterprises (EEEs); and the research contributes to FDI theory building by incorporating learning concepts in internationalization theories and by extending the context of internationalization theories to that of EEEs.

Details

Multinational Business Review, vol. 21 no. 3
Type: Research Article
ISSN: 1525-383X

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Article
Publication date: 1 January 1988

Robert G. Graham and Tuan Chyau

Introduction It has been said that “the human resource is probably the last great cost that is relatively unmanaged”. Since this article was written in 1982, we are aware…

Abstract

Introduction It has been said that “the human resource is probably the last great cost that is relatively unmanaged”. Since this article was written in 1982, we are aware of the recognition for, and the implementation of, management and planning for this resource. The new emphasis on the human resource is probably a result of a change in attitude on the part of management.

Details

International Journal of Manpower, vol. 9 no. 1
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 5 June 2017

Sven Horak and Jingjing Cui

Recent legislation in Europe and North America encourages women’s participation in corporate boards based on the belief that gender-diversified boards contribute…

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1370

Abstract

Purpose

Recent legislation in Europe and North America encourages women’s participation in corporate boards based on the belief that gender-diversified boards contribute positively to firm performance and increased competitiveness. Contrary to the West, the women’s participation rate in business has been traditionally high in China. The purpose of this paper is to find out whether gender-diverse corporate boards of Chinese automotive firms perform better financially than gender-homogeneous boards.

Design/methodology/approach

By drawing on data from the Chinese Government and Bloomberg, the authors compare and analyze the differences in financial performance (return on equity, asset growth, sales growth) and risk behavior (debt risk, R&D expenditure) of Chinese automotive firms with and without women on their corporate board.

Findings

There is significant evidence that firms with women on the board perform better across all three categories, with the exception of return on equity, for which they found no significant differences among the analyzed firms.

Practical implications

While women’s participation in corporate boards in China is low, the results of this study suggest to policy makers and firms alike to implement measures that support gender-diversified boards in order to take advantage of their potential to increase corporate performance.

Originality/value

So far, the performance of corporate boards of countries with a traditionally high share of female participation in the workforce has rarely been analyzed. Research focusing on the Chinese automotive industry is new and underrepresented, although China is the largest automotive market worldwide and a key industry of the domestic economy. This investigation contributes to the literature stream on board diversity in as well as to industry-related studies. With the example of the Chinese automotive industry, it provides empirical evidence of better performance of firms with gender-diversified boards within the categories tested.

Details

Personnel Review, vol. 46 no. 4
Type: Research Article
ISSN: 0048-3486

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