Theoretical And Empirical Study Of The Risk Early Warning Of China's Multinational Enterprises

Since the late 1990s, especially 2001, the international operation (IO) of China's firms advances quickly, particularly in outward foreign direct investment and foreign engineering projects. International operation has been the significant strategic choice of China's firms, especially ones with international comparative advantage trying to improve on themselves, and the main aspect of further advancement of China's foreign oriented economy. So far, however, the performance of China's firms' IO still remains to improve on the whole, and the imperfectness of risk management of IO has already been one of the chief factors impacting the performance negatively, in which the lack or imperfectness of early warning of risk (EWR) stands out strikingly. When going abroad, it has been the critical theoretic problem of and practical challenge to China's enterprises how to manage risk effectively, especially how to early warn the latent risks. As a response to the risk management status quo of China's firms going abroad, the dissertation dwells on it theoretically and empirically.Different from the companies operating just at home, the firms of IO face some distinct risks, such as political risk, foreign exchange risk, and cultural risk because of the variance, plurality of operational environment, and meet the difficulty of information search, normal risk of overseas branches or subsidiaries, and the dramatic effects of non-economic factors in EWR. Besides, the fact that China's market economy still remains under everincreasing improvement, principle-agent risk constitutes the most serous risk of China's firms of IO, especially to state-owned enterprises. The great majority of overseas China's companies have still not set up an effective risk management system: the level of risk management appears low at large, the severe disjunction of risk management and corporate strategy remains extensively, risk management is backward oriented, so is inactive. To some degree, lots of China's corporations have never tried to do systematic EWR. To sum up, the risk-management status quo of China's firms of IO is pressing much.In theory, there is a relationship of including and being included between early warning of risk and risk management, and the early warning system of risk (EWSR) itself is part of the risk management system. Therefore, as the compliment to the other sub-systems functionally, EWRS is defined as an "alarm bell" in essence, and its kernel function lays in giving alarms of risk in the form most beneficial to firms, and supplying the necessary information support for the relevant risk management acts or measures. The existent studies of EWR overemphasize the establishment of empirical models, and disregard the related theoretic analysis and lack of the inclusion of qualitative indicators. As a result, the capacity of early warning is imperfect as a whole. Hence, it has the chief implication for improving the research of EWR to strengthen the theoretic study of early warning of risk, and better off the existent models of EWR.The large-scale international operation of China's firms is a new economic phenomenon, China's distinct situation makes EWR for China's firms of IO extremely outstanding. System theory, and theory of open complex giant system lends the basic approaches to the construction and operation of EWSR of IO of China's firms. EWSR resides on the seventh floor of open complex giant system of world economy or global economy. The fact that the theory of open complex giant system stresses the communication and interaction of substance and information between the system itself and its surrounding environment has the significant impact on the normal operation of open complex giant system. Within the frame, the paper talks on the inner structure of EWSR of IO of China's firms, both functional and modular.In the point of information theory, EWSR is a nested frame with two circulations, the inner one of itself and the outer one of the system and the environment interacting each other. In contrast to the simple one-way communication system, EWSR of IO is two-way, has many chains of encoding and decoding, and disturbance of white noise is international and complicated. Based upon this, the essay constructs the organizational structure of EWSR and probes into the prerequisites and outer condition, that is, the vigorous participation of executives and the excellent coordination across branches. Therefore, the dissertation especially inquires into the communication and coordination between EWSR and the other branches, presents the objects needed to communicate and coordinate with, the principles of communication mechanism planning and the premises of efficient operation. Within a more macro frame, the paper investigates the effects of China's government, industrious associations, regulating bureaus, and specialized organizations in helping firms' EWSR work well.Early warning indicators system and models concerned is the technological parts of EWSR, but just one part. The output of models cannot be a part of final EWR reports directly, instead, have to be analyzed and explained by EWSR panels of experts before. The planning of early warning indicators system must follow three rules, comprehensiveness/relevance, representativeness, and maneuverability. Singling out the early warning models have to observe the rule of theory orientation with data considered, complete models should stick to the process of quantitative model-composite modular-early warning conclusion, and consider the possibility of using various models meanwhile.The establishment of EWSR is to promote the realization of corporate own strategy or aims, so must follow the cost-benefit principle, but the structure and content of EWSR's cost and benefit are so complex that prevents the setup or operating well of itself.As the further of technological study, Chapter Five takes foreign exchange risk as example, raises the signal model bused on the temporal frame. The empirical research shows, the model has certain out-of-sample capacity of early warning, but with obvious national difference.The main contributions of the dissertation lay in: systematically probing theoretically into the early warning problems of IO of China's firms deeply, carefully, and comprehensively, and advancing the study in the area strikingly; trying to use system theory, especially theory of open complex giant system, and information theory to dwell on the early warning of firms' international operation; in the aspect of approach, by taking the research of early warning of foreign exchange risk of China's firms' IO, raising the signal model based on the temporal frame.