An Analysis of the Influence of Enterprise Internationalization on Performance: A Case of China’s Listed Manufacturing Enterprises
Article Sidebar
Main Article Content
Abstract
This study aimed to examine the influence of internationalization on enterprise performance concerning Chinese-listed manufacturing enterprises and to investigate how institutional distance moderates the influence by introducing a scientifically measured framework. First, panel data of 1089 Chinese manufacturing enterprises listed from 2005 to 2021 were obtained. Then, this study subdivided the degree of internationalization (DOI) into the degree of breadth (DOB) and degree of commitment (DOC) as independent variables while using revenue on assets (ROA) as the dependent variable. After that, a fixed effect model was conducted to analyze the data.
The results found that for DOB, NCOS had a coefficient of -0.0035, and with the squared NCOS, the coefficient was -0.0053, while for the squared term was 0.0002; for DOC, the coefficient for FSTS was -0.0370, with the squared FSTS, the coefficient was -0.0703, while the squared term coefficient was 0.0372. The findings revealed that internationalization had a U-shaped influence on performance. This suggests that enterprises may face challenges during the initial stages of internationalization, leading to a decline in performance; however, as internationalization deepens, enterprises gradually adapt to foreign markets and optimize resource allocation, resulting in performance improvement. Formal institutional distance negatively moderates the U-shaped influence, while informal institutional distance does not exhibit a moderating effect. The research findings serve as a valuable resource for governments in formulating effective policies and for enterprises adjusting strategies to achieve better internationalization performance.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Views and opinions appearing in articles in the Journal of Arts of Management It is the responsibility of the author of the article. and does not constitute the view and responsibility of the editorial team I agree that the article is copyright of the Arts and Management Journal.
References
Bausch, A., & Krist, M. (2007). The effect of context-related moderators on the internationalization-performance relationship: evidence from meta-analysis. Management International Review, 47(3), 319-347. https://doi.org/10.1007/s11575-007-0019-z
Brewer, H.L. (1981). Investor benefits from corporate international diversification. Journal of Financial and Quantitative Analysis, 16(1), 113-126. https://doi.org/10.2307/2330669
Bühner, R. (1987). Assessing international diversification of West German corporations. Strategic Management Journal, 8(1), 25-37. https://doi.org/10.1002/smj.4250080104
Chen, H., Hsu, C.W., & Caskey, D. (2013). Internationalization of Taiwanese manufacturing firms: the evolution of subsidiary mandates and capabilities. Asian Business & Management, 12(1), 37-60. https://doi.org/10.1057/abm.2012.29
Chen L.M., Liu J.Y., & Zhang S.L. (2016). Influence of mimetic isomorphism Firms’ internationalization—performance relationship——an empirical study based on the legitimacy perspective in institutional theory. China Industrial Economics, 9, 127-143. https://doi.org/10.19581/j.cnki.ciejournal.2016.09.008
Cunha, H., Amal, M., Floriani, D.E., & Fleury, M.T.L. (2023). Firm internationalization approaches and performance: the moderating role of the home country’s formal institutions. International Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-08-2021-1299
Errunza, V.R., & Senbet, L.W. (1981). The effects of international operations on the market value of the firm: theory and evidence. The Journal of Finance, 36(2), 401-417. https://doi.org/10.2307/2327024
García-García, R., García-Canal, E., & Guillén, M.F. (2017). Rapid internationalization and long-term performance: the knowledge link. Journal of World Business, 52(1), 97-110. https://doi.org/10.1016/j.jwb.2016.09.005
Grant, R.M. (1987). Multinationality and Performance among British manufacturing companies. Journal of International Business Studies, 18(3), 79-89. https://doi.org/10.1057/palgrave.jibs.8490413
Han, W.W. (2010). The research on internationalization of Chinese enterprises and business performance[Master’s Thesis, Zhejiang University].
Huang, L., & Marciano, D. (2020). Interdependence Relationship of internationalization—performance in manufacturing firms listed in the Indonesia stock exchange and Chinese stock exchanges. In Proceedings of the 17th International Symposium on Management (INSYMA) 2020, 416-421. https://doi.org/10.2991/aebmr.k.200127.085
Katrishen, F.A., & Scordis, N.A. (1998). Economies of scale in services: a study of multinational insurers. Journal of International Business Studies, 29(2), 305-323. https://doi.org/10.1057/palgrave.jibs.8490038
Kim, H., Hoskisson, R.E., & Lee, S.H. (2015). Why strategic factor markets matter: “New” multinationals’ geographic diversification and firm profitability. Strategic Management Journal, 36(4), 518-536. https://doi.org/10.1002/smj.2229
Lee, I., & Cogin, J. (2022). Formalizing the HRM and firm performance link: the s-curve hypothesis. The International Journal of Human Resource Management, 33(5), 898-929. https://doi.org/10.1080/09585192.2020.1746682
Li, C.Y., & Hsieh, C.T. (2009). The impact of knowledge stickiness on knowledge transfer implementation, internalization, and satisfaction for multinational corporations. International Journal of Information Management, 29, 425-435. https://doi.org/10.1016/j.ijinfomgt.2009.06.006.
Liao, H.K., Liao, C.W., Chen, C.C., & Chen, T.W. (2023). Examining the Impact of internationalization and Competitive advantages on enterprise performance in Taiwan’s computer numerical control machine industry. Sustainability, 15(21), Article 21. https://doi.org/10.3390/su152115652
Lind, J.T., & Mehlum, H. (2010). With or without U? The appropriate test for a U-shaped relationship. Oxford Bulletin of Economics and Statistics, 72(1), 109-118. https://doi.org/10.1111/j.1468-0084.2009.00569.x
Liu, A., Chen, C., Wen, Y., Mu, Q., Li, H., & Chai, L. (2024). Foreign multinational enterprises pose. Hidden environmental pressures on China. Journal of Cleaner Production, 468, 143103. https://doi.org/10.1016/j.jclepro.2024.143103.
Ma, Y. (2023). A study on the estimation of the desirable range of cross-border capital flows in emerging economics. China Social Sciences Press, 137-141.
Shi, Y., Lim, J.M., Weitz, B.A., & France, S.L. (2018). The impact of retail format diversification on retailers’ financial performance. Journal of the Academy of Marketing Science, 46(1), 147-167. https://doi.org/10.1007/s11747-017-0559-0
Tallman, S., & Li, J. (1996). Effects of international diversity and product diversity on the performance of multinational firms. Academy of Management Journal, 39(1), 179-196. https://doi.org/10.5465/256635
Wang, G., & Hu, S. (2006). An empirical study on the correlation between internationalization of listed manufacturing firms and their performance. Systems Engineering, 12, 80-83.
Wang, L., & Zhang, C. (2023). Do emerging market multinational corporations headquarters-subsidiary relationships foster subsidiary innovation and performance in developed markets. Industrial Marketing Management, 114, 47-63.
https://doi.org/10.01016/j.indmarman.2023.07.006
Wang, R., Xie, Y., & Na (2016). Research on the Relationship between Internationalization and performance from the perspective of efficiency moderating. Soft Science, 30(6), 75-78. https://doi.org/10.13956/j.ss.1001-8409.2016.06.17
Wei, S.Y., & Lin, L.W. (2021). The relationship between extent of internationalization and firm performance (Taiwan 1992–2017). Mathematical Problems in Engineering, 2021, e5528972. https://doi.org/10.1155/2021/5528972
Yang, B., Qi, X., & Zhang, N. (2020). Liability of origin and the internationalization of EMNEs: an organizational identity perspective. Research on Economics and Management, 41(4), 74-87. https://doi.org/10.13502/j.cnki.issn1000-7636.2020.04.007
Yang, W.W. (2020). Institutional distance, integration model, and cross-border M&A performance in Chinese service industry: the moderating role of managerial characteristics[Master’s Thesis, South China University of Technology].
Zhang, Q. (2008). Correlation between internationalization of firms and their performance: an empirical study of Chinese manufacturing listed companies[Master’s Thesis, Ji’nan University].
Zhao, H., & Wang, T. (2017). Research on the demand for engineering talents under the background of "made in China 2025." Chinese University Science & Technology, 10, 7-9. https://doi.org/10.16209/j.cnki.cust.2017.10.002