Study On Influential Factors Of MNCs’ Local Embeddedness

As the world’s economy globalized, more and more companies have to jump inthis innovation to survive, keep the market share or achieve more profit. It even hasalready influenced the economic position among the countries’ internationalrelationships. In the past decades, after the theory of Global Integration matured andwas put in practices everywhere, college scholars and companies’ managers havefound another way that can help the MNCs to get more benefits from the globalization,Local Embeddedness, which means to build a interactive relationship between MNCand host country’s society.Except for the local population and culture, Local Embeddedness covers otherdeep level issues such as State System and Political Environment. If the MNC canadequately study and take advantage of these local information and resources, it canhelp them to boot their competitiveness and get a better long-term decision.In the past10years, the number of Chinese multinational operation groups,including some large corporations, has been increased dramatically, they havebenefitted from the Global Integration, however, Local Embeddedness is still a freshidea for most of them. Aimed at the instances of Chinese multinational operators, thepaper analyses the influence factors of MNC’s Local Embeddedness. Based on thereal condition of the companies and analysis above, concludes the suggestions Thepaper includes4parts。Part1. Introduce the4types of Embeddedness Pattern: Economy, Technology,Society and State System. Then discuss their influences to the host country. Last, fromthe aspects of both the MNCs and host countries, explain the Local Embeddednesscan make MNCs and host countries are mutually beneficial to each other.Part2. List the influence factors. One by one, explain why they can and how they,,influence the Local Embeddedness. On the MNCs’ side, the strategic motive,ownership specific advantage and internalization mode manifest the corporation’s overall strategy. On the host countries’ side, as the investment vehicle of theglobalization, its economic system and social culture would affect the MNCs’decisions on embeddedness mechanism, because of the interaction between the twosides, the factors of host countries’ economy, politics, and scientific–technologiccreation would affect the MNCs’ local embeddedness.Part3. Through the analysis of fund flow and the investment location, explain thehistorical process of the Chinese MNCs and their current problems. Then re-analyzethe influence factors for Chinese MNCs. The article thinks, in the past30years,although Chinese MNCs have gained great achievement, there is still a long distancefrom the MNCs of advanced capitalist countries at the aspects of investment scale, thedepth level of the technical embeddedness and the level of interaction with the localsociety system. The factors which affect Chinese MNCs’ Local Embeddedness notonly are governments’ policies and the state’s system but also the differences betweenthe countries and some kinds of political factors.Part4. Based on the inadequate degree of the Chinese MNCs’ LocalEmbeddedness, conclude the suggestions. The shortness of the Local Embeddednessis because both the sides of the macro economy system and micro situation of Chinesecorporations’ inadequate competitiveness. So that, we need to improve from the bothsides, the government needs to adjust the economic policies to enhance theembeddedness’s efficiency, and the MNCs need to establish more flexibleembeddedness strategies.