The Implications of Springboard Strategies for Chinese Firms

Chinese firms' internationalization during the recent decades has attracted increasing interest from international business researchers. Despite recognition of the important role of the home country of Chinese multinational enterprises (MNEs), there are insufficient studies that pay attention to unfolding their complex internationalization strategies and related outcomes. In particular, how Chinese firms use their domestic market as a preparatory base and a testing ground is an interesting research question which remains unexplored. Building upon the springboard perspective, this thesis investigates the sources of international experience which Chinese MNEs can exploit to confront their deficiency of international knowledge in the process of internationalization. I examine the inward internationalization experience which is the original source of international experience which Chinese firms obtain from their domestic market. Moreover, extending the springboard perspective, I combine the Uppsala model by adding the exporting experience as the complementary source of international experience. Further, the moderating effects of the international experience of members of top management teams have been investigated. Using data on Chinese listed firms from 2009 to 2018, I find that the propensity of Chinese firms conducting OFDI is positively associated with their inward international experience and exporting experience. The exporting experience has a complementary effect on inward internationalization. International experience that members of a top management team hold can enhance the positive effects of exporting experience on the propensity of Chinese firms' OFDI. Drawing on the compositional springboard view, the thesis further examines the factors affecting cross-border acquisitions by Chinese MNEs. I investigate two factors, compositional springboarding capacity and external support for in-house innovation from the home-country government, as well as their effects under the contingency of home-country regional innovation performance. I find that the number of foreign acquisitions by Chinese MNEs is positively associated with the firms' compositional springboarding capacity, but negatively associated with innovation funds from the home-country government. Moreover, the impact of external support of in-house innovation from the home country government on foreign acquisitions by Chinese MNEs is contingent on the sub-regional innovation performance. Strong regional innovation performance weakens the negative relationship between external support for in-house innovation and cross-border acquisitions by Chinese MNEs. Finally, this thesis borrows the economic concept of market power which has been widely applied in economic and financial research to test the effects of Chinese firms' OFDI. The propensity score matching technique and the difference in difference method are applied to capture Chinese MNEs' market power changing post-OFDI. The results demonstrate that Chinese MNEs' market power would decline post-OFDI. Further, this decrease can be eased if they are equipped with more technological capabilities and operate in industries with less competitive intensity.