This dissertation focuses on understanding the process of internationalization of EM MNEs. By investigating the effects of Chinese OFDI on their strategies in home country, essay one examines how these Chinese MNEs leverage core competences and channel their strategic assets and capabilities back to their home country. Essay two tries to extend the internationalization theory by investigating the big step internationalization strategy that is widely adopted by EM MNEs in recent years.Design/methodology/approach
The empirical context for this dissertation is the OFDI of Chinese firms in the 2001 to 2013 period. Due to the over-dispersion in the dependent variable, I use a negative binomial regression analysis, which is a generalization of the Poisson model and explicitly estimates an over-dispersion parameter. I also used a firm fixed effects model to control for difficult-to-observe firm characteristics. Findings
In essay one, I find that Chinese OFDI facilitate their domestic geographic diversification but hinder domestic industry diversification. Furthermore, international expansion and domestic diversification can reinforce each other for geographic diversification but substitute for industry diversification. In essay two, I find that big step internationalization in the early stage for EM MNEs could accelerate their subsequent FDI expansion. Moreover, the relationship between big step internationalization and subsequent FDI expansion will depend on both the heterogeneity of internal capabilities and the firms’ strategic decisions.Research limitations/implications
This research has some limitations. First, the scope of the present sample is limited to the listed firms. Second, data limitations prevent us from differentiating the levels of the political connections of board of directors. Political connections with central government or local government may generate different implications for this study. Practical implications
Essay one provides guidance for EM MNEs to formulate and implement domestic geographic or industry diversification strategies to obtain competitive strength. This dissertation provides the right path for internationalization. In essay two, even though the gradual approach is intuitively appealing, managers of late internationalizers often believe their businesses will not survive unless they go global aggressively. The gradual approach often underestimates the importance of heterogeneity among internationalizing firms.Originality/value
First, this study proposes that OFDI could be an active learning process especially for emerging market MNEs. Second, this study contributes to the diversification literatures by investigating the relationship between international diversification and domestic diversification. Third, this study extend internationalization process by examining the EM MNEs internationalization. Keywords
Emerging market, multinational enterprises, internationalization, Chinese OFDI, diversification.