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Rethinking the literature on the performance of Chinese multinational enterprises

Rugman, A., Nguyen, Q. T. K. ORCID: https://orcid.org/0000-0003-0179-3973 and Wei, Z. (2016) Rethinking the literature on the performance of Chinese multinational enterprises. Management and Organization Review, 12 (2). pp. 269-302. ISSN 1740-8784

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To link to this item DOI: 10.1017/mor.2016.13

Abstract/Summary

We synthesize the literature on Chinese multinational enterprises (MNEs) and find that much of the prior research is based on as few as a dozen case studies of Chinese firms. They are so case-specific that it has led to a misplaced call for new theories to explain Chinese firms’ internationalization. In an attempt to better relate theory with empirical evidence, we examine the largest 500 Chinese manufacturing firms. We aim to find out the number of Chinese manufacturing firms to be true MNEs by definition, and to examine their financial performance relative to global peers using the financial benchmarking method. We develop our theoretical perspectives from new internalization theory. We find that there are only 49 Chinese manufacturing firms to be true MNEs, whereas the rest is purely domestic firms. Their performance is poor relative to global peers. Chinese MNEs have home country bound firm-specific advantages (FSAs), which are built upon home country-specific advantages (home CSAs). They have not yet developed advanced management capabilities through recombination with host CSAs. Essentially, they acquire foreign firms to increase their sales in domestic market, but they fail to be competitive internationally and to achieve superior performance in overseas operations. Our findings have important strategic implications for managers, public policy makers, and academic research.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > International Business and Strategy
ID Code:61029
Publisher:Cambridge University Press

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