Chinese thinking, foreign strategy : the administrative heritage of Chinese multinational enterprises.

Abstract

The study of Multinational Enterprises (MNEs) entering foreign markets has been a widely researched topic in International Business (IB) for over sixty years. Internalisation theory and the Uppsala model became leading economic and behavioural approaches. With the emergence of Chinese MNEs (CMNEs) following the announcement of the Go Out policy in 1999, new paradigms were proposed to explain their entry strategies into foreign markets. The extant paradigms assume that CMNEs have no strong assets to leverage, however formal institutions, such as the support of the state and the size and competitive nature of the home market are unique advantages for CMNEs. Also, the distinctive country-of-origin culture, such as the network nature of Chinese society, as informal institution, impact behaviour and strategic choices. Institutional theory suggests that the context in which CMNEs operate will impact their way of “doing things”, their administrative heritage. These heritage assets arguably impact the strategy-making processes and behaviour of CMNEs and provide distinct Assets of Foreignness (AOFs) when entering foreign markets. This research is focused on three CMNEs in different industries and their greenfield subsidiaries in New Zealand. The research questions are: Q1:What is the impact of CMNEs’ administrative heritage on the strategy practices of their New Zealand subsidiaries? Q2:To what extent do CMNEs’ strategy practices provide their New Zealand subsidiaries with distinct AOFs? A Strategy-as-Practice approach (SP) reveals the lived experience of managers and employees and Interpretive Phenomenological Analysis (IPA) as research method is used: semi-structured interviews replicating the data with multiple participants at different organisational levels. The study suggests that the three CMNEs rely on the formal and informal institutional context such as Confucianism and the networked Chinese diaspora. It

adds the construct of association, as administrative heritage of CMNEs, to the extant literature, based on the unique formal and informal Chinese context. The research also suggests that the observed behaviour and strategy practices, such as the relationship with the Chinese diaspora, provide the subsidiaries with AOFs and potentially a competitive advantage in the New Zealand environment.