Research On The Choice Of Corporate Cross-regional Equity Entry Mode And Its Economic Performance Based On Negative Performance Feedback Perspective

As an important step in the “going out” strategy,choosing the cross-regional equity entry mode(e.g.,full-control or shared-control entry mode)is a key decision for enterprises,and is related to their competitive advantage in the global market and long-term international development.Due to market segmentation,Chinese enterprises have difficulty in successfully achieving domestic cross-regional expansion and often face the dilemma of poor business performance.Therefore,how to improve the effectiveness of Chinese firms' choice of cross-regional equity entry mode has become a critical issue to be addressed.As a result,the following two questions of great theoretical and practical value have arisen: What factors influence the choice of cross-regional equity entry modes for Chinese enterprises in the Chinese context? How to choose the cross-regional equity entry mode that can bring competitive advantages to the enterprises?Focusing on the above research questions,this study systematically reviews the research literature on cross-regional equity entry mode choice.By summarizing the existing research,this study believes that the behavioral theory of firm(BTOF)should be introduced to meet the increasingly diverse and dynamic needs of cross-regional equity entry mode decision research.Based on two closely related and progressive empirical research designs,this study systematically examines the important role of problem search and experiential learning processes resulting from context-specific negative performance feedback in explaining the choice of cross-regional equity entry mode and its impact on firm economic performance.Based on the theoretical analysis and cross-regional market entry events of Chinese A-share listed enterprises from 2003-2019,this study uses Linear Probability Model(LPM)and Fit Analysis Models for analysis,which mainly yields the following findings:(1)There is an inverted U-shaped relationship between negative performance feedback for a specific equity entry mode of domestic cross-regional expansion and the likelihood that the firm will continue to follow that entry mode for future cross-regional expansion in the domestic market,but a negative relationship with the likelihood that the firm will continue to follow that entry mode for future cross-regional expansion in foreign markets;(2)Regional institutional distance and cross-regional operational experience will play an important moderating role in the above relationship;(3)There is no significant relationship between specific(domestic and foreign)cross-regional equity entry modes and firm(short-and long-term)performance;(4)A firm's choice of cross-regional equity entry mode in the domestic market is consistent with the expectations of the BTOF can bring better short-term performance to a certain extent,but cannot bring better long-term performance;while a firm's choice of cross-regional equity entry mode in the foreign market is consistent with the expectations of the BTOF can bring better(short-and long-term)performance.In summary,the BTOF not only predicts the most common cross-regional equity entry mode choices,but also to some extent the more appropriate cross-regional equity entry mode choices.By answering the above research questions,this study has five main research contributions as follows:(1)Adding a behavioral-based explanation to the increasingly diverse and dynamic cross-regional equity entry mode decisions;(2)Contributes to the BTOF by meticulously dissecting the actual causal mechanisms and organizational learning processes between performance feedback and management decisions through a directed problem search setting;(3)Distinguishing and exploring the differential response behaviors of firms in domestic and foreign markets and their interactions,which is a useful attempt to theorize the Chinese context.;(4)Incorporates regional institutional distance and cross-regional operational experience into the research framework and clearly defines the boundary conditions of firm responsive performance feedback,thus enhancing the contextual adaptability of the research framework;(5)Examines the performance consequences of cross-regional equity entry mode choice driven by the BTOF perspective,which is an important guide for Chinese enterprises' strategic practice of “crossing the river by feeling the stones” during the transition period.