Outward internationalization of private enterprises in China: The effect of competitive advantages and disadvantages compared to home market rivals

Liang, Xiaoya; Lu, Xiongwen; Wang, Lihua
January 2012
Journal of World Business;Jan2012, Vol. 47 Issue 1, p134
Academic Journal
Abstract: This study uses the resource-based view of a firm to examine the outward internationalization of private firms in China. We investigate the extent to which advantages/disadvantages of resource endowment and organizing capability of Chinese private enterprises (relative to both state-owned enterprises and foreign-invested enterprises at home) may drive outward internationalization and affect their risk-taking tendency when going international. Our analyses of 553 Chinese private enterprises show that a Chinese private firm''s likelihood of venturing abroad is associated with resource endowment advantages vis-à-vis foreign-invested enterprises, organizing capability advantages vis-à-vis state-owned enterprises, and organizing capability disadvantages vis-à-vis foreign-invested enterprises. These same advantages (or disadvantages) in organizing capabilities also increase a firm''s likelihood of choosing a high-risk entry mode. We also find that a firm''s resource endowment and organizing capabilities interact with each other and mutually enhance each other''s effect on the likelihood of outward internationalization.


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