Chinese enterprises in Germany: Establishment modes and strategies to mitigate the liability of foreignness

Klossek, Andreas; Linke, Bernd Michael; Nippa, Michael

doi:10.1016/j.jwb.2010.10.018

Cited by 111 publications

(79 citation statements)

References 28 publications

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“…The literature focuses mainly on the benefits that Chinese firms gain from such investments (e.g., Klossek, Linke, & Nippa, 2012;Wang & Boateng, 2007). However, there are relatively few studies examining the costs of such a strategy.…”

Section: Insert Table 1 Here Home Country Institution and Chinese Ofdimentioning

confidence: 99%

“…We really appreciate insightful comments and helpful suggestions from two anonymous reviewers, as they have helped us sharpen our contributions. Boisot & Meyer, 2008;Chen & Young, 2010;Child & Rodrigues, 2005;Deng, 2007Deng, , 2009Hashai & Buckley, 2014;Hennart, 2012;Klossek,et al, 2012;Li, 2007b;Liu, 2007;Liu & Buck, 2009;Luo & Tung, 2007;Mathews, 2006;Peng, 2012;Quelc & Knoop, 2006;Rui & Yip, 2008 Child & Rodrigues, 2005;Deng, 2007Deng, , 2009Hong & Sun, 2006;Li, 2007b;Luo & Tung, 2007;Parmentola, 2011;Peng, 2012;Yang et al, 2009 Bonaglia et al, 2007;Child & Rodrigues 2005;Deng, 2007;Du, 2003;Duysters et al, 2009;Hashai & Buckley, 2014;Hennart, 2012;Hong & Sun, 2006;Klossek et al, 2012;Li, 2007b;Liu & Li, 2002;Luo & Tung, 2007;Palepu et al, 2005;Warner et al, 2004;Yang et al, 2009 …”

Section: Notesmentioning

confidence: 99%

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Rethinking the Literature on the Performance of Chinese Multinational Enterprises

2016

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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 casespecific 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 firmspecific 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.

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Section: Insert Table 1 Here Home Country Institution and Chinese Ofdimentioning

confidence: 99%

Section: Notesmentioning

confidence: 99%

Rethinking the Literature on the Performance of Chinese Multinational Enterprises

2016

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“…The extensive literature on the short-term performance of bidders from developed markets (especially the U.S. market) finds that bidding firms earn negative abnormal returns on average (Kim, Haleblian, & Finkelstein, 2011;Klossek, Linke, & Nippa, 2012;Kobrin, 1979). The main argument for this finding is that corporate diversification is redundant as investors can hold diversified portfolios.…”

Section: Performance Of Cross-border Mandasmentioning

confidence: 99%

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

Nicholson

Salaber

2013

International Business Review

165

155

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During the recent decade, the world has witnessed the rapid growth of MNEs from emerging economies. Their increasing participation in cross-border mergers and acquisitions has raised great attention in the extant literature. This study evaluates the value creation from these cross-border transactions from two representative emerging countries, namely China and India, and determines factors that result in the different performance of these international acquisition activities. Crossborder acquisitions conducted by these countries' companies indeed lead to significant shareholder wealth creation. Furthermore, Indian shareholders are more likely to benefit from deals in small cultural distance countries, while Chinese investors gain from the cross-border expansion of manufacturing companies. Location also affects the performance of cross-border acquisitions, with acquisitions into developed countries generating higher returns to shareholders. Our sample consists of 203 Indian and 63 Chinese cross-border deals over the period 2000-2010 and our results hold after controlling for various deal-level and firm-level characteristics.

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“…In the global business environment, these EM firms face several issues in the nascent internationalization stage due to their linkages with their home country (Stillman, 1974). One of the critical issues faced by multinational enterprises, often underscored in the literature, involves the establishment and maintenance of legitimacy in foreign markets (Klossek et al, 2012;Kostova and Zaheer, 1999;Liao and Yu, 2012). Legitimacy is central in the milieu of institutions that define the rules of the game in international markets (Ahlstrom et al, 2008;Davis et al, 2000), and firms need to achieve taken-for-grantedness in these foreign markets (Guillén and García-Canal, 2009;Luo and Tung, 2007).…”

Section: Introductionmentioning

confidence: 99%

Euphoria in financial markets: How Indian companies generate value in their cross-border acquisitions

Rao‐Nicholson

Ayton

2016

Research in International Business and Finance

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In this paper, we investigate the effect of euphoria on returns derived by Indian companies in their cross-border acquisitions. Cognitive legitimacy generated at the country level facilitated firms in deriving higher value from internationalization. In addition, overoptimism after the legitimacy-building event led to euphoria in financial markets and short-term abnormal returns. Hence we argue that the springboard effect created by legitimacy is short-lived, as euphoria fades away over time. Using cross-border and domestic acquisitions by Indian companies during 1999-2009, and controlling for fundamental factors, both financial and non-financial, we find support for our euphoria hypothesis. Because of overoptimism, Indian companies experienced short-term abnormal returns in their cross-border acquisitions in the few years following the legitimation process, but not in later years.

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Chinese enterprises in Germany: Establishment modes and strategies to mitigate the liability of foreignness

Cited by 111 publications

References 28 publications

Rethinking the Literature on the Performance of Chinese Multinational Enterprises

Rethinking the Literature on the Performance of Chinese Multinational Enterprises

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

Euphoria in financial markets: How Indian companies generate value in their cross-border acquisitions

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