The Effect Of Local Knowledge On The Risk Bearing Capacity Of Multinational Enterprises

This paper mainly discusses under the background of international business,the influence of local knowledge on the risk bearing capacity of multinational enterprise managers and its mechanism.According to literature review and theoretical analysis,four hypotheses are proposed that the understanding of local economy,local policies,local business practices and local market have positive and direct effects on the risk bearing capacity of multinational enterprise managers,and a research model is therefore established.With the method of quantitative research,a research questionnaire is adapted from mature scales of related research and 133 effective questionnaires are collected through online and offline distribution.The data are computed by SPSS 21.0 and AMOS 21.0 for descriptive statistics analysis,factor analysis,correlation analysis and structural equation model analysis to test the validity of the hypotheses and the research model.The study finds that in this established structural equation model,the understanding of local economy and local business practices have a positive and direct effect on the policy risk bearing capacity of multinational enterprise managers;the understanding of local policies and local market have a positive and direct effect on the competitive risk bearing capacity of multinational enterprise managers.The main contribution of this paper is that through literature review,the significance of local knowledge and risk bearing capacity on improving multinational enterprise managers'ability in strategic decisions-making and on enhancing the performance of multinational enterprises are discussed.The theoretical model and the structural equation model illustrate in detail the significant influence and mechanism of the four factors of local knowledge on the risk bearing capacity of multinational enterprise managers,which is beneficial to researchers for further study on improving the managers' risk bearing capacity and conquering the liability of foreignness.In the last part of this paper,combining the theory of literature with the results of the study,some managerial implications and advice are put forward.In this research,there are some limits on the effective sample size,sample representativeness,and the goodness of fit of structural equation model.For future research,on the basis of an enlarged sample size,a deeper research on improving multinational enterprise managers' risk bearing capacity could be made through studying the influence of local tacit knowledge on more types of international risks.Moreover,it may be fruitful to study the association between local relationship and risk bearing capacity of multinational enterprise managers.