Theoretical And Empirical Study On Internationalization And Corporate Performance

We are now in an ear when everyone, from famous scholars to Captains of Industry, seems to subscribe to the notion that internationalization can bring more profits to firms. However, empirical studies of the past 40 years have drawn divergent results for the link between performance and the degree of a firm's internationalization. Some scholars think increasing internationalization is good for the firm's growth, while other scholars'study showed that internationalization may impair the firm's economic return. Some studies even conclude that there is no systematic relationship between a firm's internationalization and its performance. At the same time, the practice of Chinese enterprises'internationalization often makes us perplexed. On one side, the amount of china's export trade and outward FDI (Foreign Direct Investment) has been increased abundantly and steadily; while on the other side, negative news about Chinese enterprises' overseas operation keep on coming in. These theoretical and practical contradictions all point to one question, that is, whether international expansion can certainly improve the firm performance, especially in china as a developing country during the stage of economic transition and newly industrialization. The discussion on this question is the examination of the fundenmental hypothesis under the specific environment of China, which may help to reveal the impacting mechanism of internationalization on firm performance and provide some decision-making evidence for the internationalization of Chinese enterprises.In view of the unconvincing results pertaining to the performance implication of internationalization in the existing literature, many scholars held that the endogeneity and multiformity of internationalization strategy and the context-dependency of internationalization-performance relationship are main reasons accounting for the conflicting results, while different operationalization method of internationalization also made those empirical findings incomparable. Through the contingency perspective lens, this dissertation sets up a integrated conceptual model regarding resource as antecedents of International-ization and organizational learning as a moderator of internationalization-performance, and analyze the complex relationship among firm resources, internationalization, organizational learning and firm performance. By distinguishing between the degree of internationalization scope and internationalization depth, this dissertation also discusses the different impacts of different international expansion strategies on the firm performance. This dissertation first reviews the theoretical research of corporation internationalization and the empiricial examination of the relationship between degree of internationalization and corporate performance, and then analyzes the development process and features of Chinese enterprises' internationalization. On this basis, this dissertation explores the theoretical foundation of the relationship between internationalization and corporate performance from various angles of the economic-based analysis, organizational behavior perspective and strategy management. Integrating different internationalization literature streams, this dissertation presents a complete and systematic framework for analyzing firm resources, international expansion strategy, organizational learning, as well as their associated impact on firm performance, and put forward relevant hypotheses based on theory deduction and analysis of Chinese enterprises' internationalization practice. The dissertation argues that product advantage and resource available for international expansion precede internationalization, and when the firm can successfully exploit its product advantage and resource advantage, the increase of internationalization can bring more benefits, that is, the internationalization aids the translation of firm resources advantage into good performance; at the same time, the social, technological and marketing learning activities during the internationalization can enhance the firm performance and increase the potential benefits of internationalization, which means organizational learning positively moderate the internationalization-performance link.Choosing Jiangsu manufacturering enterprises as an example, this dissertation conducts the empirical research based on the questionnaire survey to test the hypotheses. Firstly, the operational definitions of the variables in the conceptual model is developed by comparing and selecting widely used scales or indicators in published literatures. Based on the analysis of present situation features of Chinese enterprises international operation, a two-dimensional internationalization measuring system is set up including the breadth and the depth of internationalization and the questionnaire is designed accordingly. Secondly, large-scale questionnaire survey is conducted among the internationalizing manufacturing enterprises in Jiangsu province. Two methods are used, which are key interviewees and convenience sampling, to hand out questionnaires and 205 usable surveys are yielded. Thirdly, structural equation modeling is applied to test the conceptual model after the reliability and validly of the questionnaire is verified.The empirical results show that firm resource advantage positively affects the degree of internationalization, including breadth and depth of internationalization; the increase of internationalization breadth improves the firm performance, while the effect of internationalization depth on the performance is not obvious; because of the direct positive impact the resource advantage has on firm performance, internationalization has only partial mediate effect between firm resource and performance; the social and technological learning activities during internationalization strengthen the performance advantage of internationalization, while the market learning' mediating effect is not significant.Finally, the results of the empirical study are analyzed and relevant conclusions drawn. Some advice are put forward against the problems revealed in the study.In order to have a good performance in international competition, Chinese manufacturing enterprises need to strengthen initiative innovation and enhance their core competence, choose suitable international expansion strategies according to their resource base; establish effective organization learning mechanism and improve international operational capability. As supporting and service institutions, governments should build favorable market environment, assist the enterprises to get the resource necessary for internationalization, create various learning opportunities for the international growth of chinese enterprises.