International venturing by emerging economy firms: the effects of firm capabilities, home country networks, and corporate entrepreneurship

Abstract

Past literature on foreign direct investment generally supports an economics perspective that there is a direct relationship between firm-specific ownership advantages and international expansion. However, in emerging economies, with their institutional environment context characterized by low resource munificence and continuous economic liberalization, a theoretical extension of the current perspective is needed. This paper introduces new parameters by focusing on specific ownership advantages and strategic actions that firms have to develop in response to the institutional characteristics of the emerging economies when they decide to pursue outward FDI. The focus here is on international venturing that requires a firm to engage in activities for new business creation in a foreign country rather than simply seek to distribute a product in another nation. It is shown empirically that the relationship between firm-specific ownership advantages and international venturing is moderated by the degree of home industry competition and export intensity. In addition, such a relationship is mediated by the intensity of corporate entrepreneurial transformation in the form of innovation, new business creation, and strategic renewal. Journal of International Business Studies (2007) 38, 519–540. doi:10.1057/palgrave.jibs.8400278

The Pitfalls of Using Foreign Direct Investment Data to Measure Chinese Multinational Enterprise Activity

“…They have been actively involved in undertaking FDI to these offshore SPEs, as well as actively using them to structure onward-journey FDI. The BVI was the most commonly used jurisdiction (with 154 SPEs, averaging 1.5 per MNE in the sample), followed by Hong Kong (81) and the CI (59). The number of triad-based SPEs therefore stood at 301, far outnumbering those in all the other THOFCs (i.e.…”

“…Yiu, Lau and Bruton (2007), for example, do not specify in the sample of Chinese MNEs they use whether SPEs are included as subsidiaries or not, and do not even discuss this important issue. 59 While Ramasamy, Yeung and Laforet (2012) do briefly note that there may be an issue with FDI to THOFCs, it is also not at all clear whether or not the data issues this creates are properly dealt with or that they fully understand them. They claim that their method allows them to "avoid the tax haven problem that has plagued other similar studies."…”

Internationalization trajectories--a cross-country comparison: Are large Chinese and Indian companies different?

“…Finally, EM MNEs are often considered to suffer from late-comer competitive disadvantages (Chittoor and Ray, 2007;Luo and Tung, 2007). This is one of the reasons why recent investments (from approximately 2001 onward, see Buckley et al, 2007;Yiu et al,2007;Li, 2007) for FDI into developed markets has been of an opportunity and asset seeking rather than asset exploiting nature.…”

“…Described as ' springboarding' (Luo and Tung, 2007;Rui and Yip, 2007), the internationalization strategies of emerging market firms are characterized by their high-risk, aggressive and ' boom and bust' or radical nature. Firms often target developed countries in search of (strategic) assets (Li, 2007;Buckley, 2006;Luo and Tung, 2007), and pursue many customers in many foreign markets at once in a strategy of entrepreneurial venturing (Yiu et al, 2007). As they aim to catch up with western firms, emerging market MNEs continue to be strongly home oriented; as internationalization occurs often through exports (Li, 2007;Chittoor and Ray, 2007).…”

“…Secondly, the pace of growth however can be expected to be much higher than that of developed country MNEs, as a reflection of the ' catch-up' strategies (Li, 2007) of MNEs, the growth of entrepreneurial venturing activities in which firms pursue many foreign markets at once (Yiu et al, 2007), and the aggressive wholly-owned acquisitions that are made abroad in recent years (Buckley et al, 2007). In case of state-owned firms, the pace of growth will be strongly influenced by government policies and their perception of geo-political interests.…”