In The Determinants Of Multinationals Globalization And Localization Strategy And Its Impact On Performance

In past decades, the MNCs have played a critical role in China's economic development, to study the basic rules of existing MNCs operation in China will be helpful to all those MNCs who wants to run business in China. On the other hand, those experience and lessons will benefit those Chinese Company which wants to run business in overseas. This study focus on the International strategy of MNCs in China, how was it figured out? Which kinds of factors are playing the important role? And how does it impact their performance? According to the SCP paradigm in Industry Organization(IO) theory, the external environment and its'fit'will be the key factor on determining the strategy and performance. Also in line with the Resources-Based View(RBV), the organizational resources or capability is the key to define their strategy and performance, this study has tried to set up a comprehensive model to cover above two major factors and to discuss under which condition it will work.Based on pervious research, this study combined Strategy Management, Resource-Based View, Industry Organizational theory together, defined the corporate competency, environment factors, and build a theoretical model to explain the company's international strategy, and its impact to their performance, this empirical research will pave the way for further research on this domain.With the literature review, this study set up a conceptual model, independent variable including Environmental factor and Competencies factors. There are three latent variables in Environmental factor, they are Importance, Rate of Change and Complexity. On the aspect of competency, this study classifies the competencies to two categories:explicit and tacit, explicit means Marketing competency and technical competency while tacit means Organizational competency and Network competency. In this theoretical model, Globalization and localization is the mediator, dependant variables include financial performance and non-financial performance.On top of those general independent factors, this sturdy makes further effort on the model by adding some moderators, including corporate size, phase of international, industry category and structure of share holder, those moderator effects were applied to the relation between competency vs. strategy, competency vs. performance and environment vs. strategy. With the statistics from the data collected from those MNCs in China, most hypothesis were supported while the Technical competency lead to good performance wasn't supported, and there isn't any significant impact between the organizational competency and international strategy, only the rate of change has a positive relation with localization strategy. Also the mediator effect was not supported in this study. Practically, those conclusions can be used in reality.The key innovation in this dissertation:Firstly, the innovation of methodology, the previous research on Strategy was focus on Environment or Competency, as SCP paradigm or RBV shown, but it is not a comprehensive model as only one of those key factors was considered. In this study, the trial of combining two factors into one model is a new approach and some interesting result was found.Secondly, the innovation of the conclusions. We found that the technolocia competency has not correlations with corporate performance, this conclusion will be helpful for those companies which wallow in the concept of technics mean everything. This conclusion is also good for those Chinese company which wants to go abroad, they should focus on more market competency to understand what is the customer most needs. We also found that the technical competency has positive correlations with Globalization strategy, when applying this correlations to IJV, we will find as one of the nature of IJV, the localization strategy will be perfered by local share holders, then the conflict occurs, that's why the failure ratio of IJV is significant higher than normal one, the perspective to explain the failure ratio by the correlations is one of those innovations.Thirdly, a lot of moderators were considered in this study, this effort will help to explain the relations of competence and performance will be valid under which conditions. It also helps to clarify the relations of environment vs. strategy and competency vs. strategy. It is a further work on building the theory model and can be used on guiding the practice.The last but not least, this empirical study applied the MNCs theory in China with local MNCs'data, although the objects are MNCs, but the findings also can be applied to those China's companies who wants to run business in abroad.