The rise of China’s outward foreign direct investment (OFDI) has resulted in an increasing number of research studies. A variety of firm, industry and country-related factors have been examined largely in an isolated fashion. This thesis adopts an integrated approach in conceptual development and addresses three empirical questions surrounding the internationalization of Chinese firms.
Based on productivity heterogeneity theory and the strategic tripod framework (integrating resource-based view, industry-based view and institution theory), the first study carries out a multi-dimensional analysis to examine the factors driving exporting firms to engage in OFDI as part of their internationalization strategy. Hypotheses are tested using a recent survey of Chinese privately-owned enterprises.
The second study attempts to answer two questions: what are the nature of the specific strategic resources that are sought after by Chinese acquirers and whether a partnering approach is a viable strategy for post-CBMAs? Draws on multiple case studies of Chinese firms’ cross-border mergers and acquisitions (CBMAs), it is revealed that, possessed with resource advantages in terms of domestic developed technological know-how and abundant international experience, Chinese firms are likely to engage in CBMAs to seek well-known brands, advanced technologies, established distribution networks and management know-how possessed by developed economy (DE) firms. For Chinese firms, being the new players in international markets, the partnering approach is a viable strategy for securing strategic resources, reducing the unintended consequences of traditional integration and maintaining the strategic resources of the foreign firms.
Drawing on the entry mode literature and the strategic tripod framework, the third study investigates whether firms that used hybrid entry mode (a combination of exporting and OFDI) performed better than exporting-only ones. The dataset used is the same survey used in the first study and it is found that employing OFDI entry mode does not improve an exporting firm’s performance.
