Internationalization Speed And Survival Of Foreign Subsidiary

With the development of economic globalization,China’s Outward Foreign Direct Investment(OFDI)has developed rapidly.China’s OFDI has achieved excellent results in terms of volume,but the foreign subsidiaries of Chinese multinationals survived far less than expected,and the average survival time was less than 1/2 of that of domestic companies.The foreign subsidiaries’ survival performance is affected by many factors,including micro factors of enterprises,institutional environment of host countries,multi-dimensional distance and so on.This paper analyzes the impact of the dynamic internationalization process of enterprises on the survival performance of overseas subsidiaries from the perspective of "diseconomies of time compression" and the combination of resource dependence and institution-based theories.At present,the relationship between internationalization speed and corporate performance is a hot topic in the international business field.However,scholars often use a single indicator to measure internationalization speed,which is one-sided.Most studies focus on the relationship between the internationalization speed of firms and the financial performance or market performance of parent companies,ignoring the impact of the speed of internationalization on the foreign subsidiaries’ survival performance;the existing research on the survival of foreign subsidiaries mainly uses binary Select the model,this model cannot analyze the survival persistence of foreign subsidiaries;in addition,most of the existing researches are based on developed economies,lack of research on China.Moreover,there is no consistent conclusion on the relationship between internationalization speed and firm performance,it may be that the adjustment of the situational factors is ignored.The institutionbased theory view is that the institutional differences between the home country and the host country are also important factors affecting the performance of the enterprise’s OFDI.The doing business distance comprehensively reflects the degree of difference between the home country and the host country system for the environment and the market environment,and is an important factor affecting the survival of foreign subsidiaries.In addition to the external environment of the enterprise,the internal resources of the enterprise are also factors that cannot be ignored in the study of the survival of foreign subsidiaries.Therefore,this paper uses composite indicators to measure internationalization speed,focusing on its impact on the survival performance of foreign subsidiaries,as well as the adjustment of the relationship between business environment distance and redundant resources.First of all,this paper sorts out relevant research on the survival of foreign subsidiaries,focusing on the research on the internationalization speed,the doing business distance and the impact of redundant resources on the survival of foreign subsidiaries;Secondly,this paper takes the foreign subsidiaries of China’s “going out” A-share listed companies as the research object,and analyzes the living conditions of foreign subsidiaries by collecting the data of foreign subsidiaries of listed companies.The results of nonparametric analysis showed that the average life expectancy of overseas subsidiaries was 2.26 years,and a large number of overseas subsidiaries survived only one year;Third,using the Cox proportional hazards model,study the impact of internationalization speed on the survival of foreign subsidiaries,and study the adjustment effect of the business environment distance and redundant resources;divide the speed of internationalization into two dimensions of depth and breadth,and the impact mechanism of internationalization speed on the survival of foreign subsidiaries is deeply analyzed.Through empirical analysis,the paper draws the following conclusions: First,the speed of internationalization will negatively affect the survival performance of overseas subsidiaries.The impact of the internationalization speed in different dimensions on the survival of foreign subsidiaries is different,and the breadthbased internationalization speed has a greater impact on the survival performance of overseas subsidiaries.Second,the doing business distance will weaken the relationship between the internationalization speed and the overseas subsidiaries’ survival performance.Thirdly,there are differences in the adjustment effects of different types of redundant resources on the speed of internationalization,specificity of precipitative redundant resources strengthen the relationship between the speed of internationalization and the survival performance of foreign subsidiaries,however,non-precipitating redundant resources do not moderate the relationship between the speed of internationalization and the survival performance of foreign subsidiaries.Finally,according to the conclusions of this paper,relevant policy recommendations are proposed from both the enterprise and the national level.Enterprises should comprehensively consider the host country environment and internal resources of the enterprise,choose a reasonable international expansion speed,and avoid follow-up investment;the state should appropriately relax the financing conditions of domestic enterprises,encourage enterprises to OFDI,and establish a systematic host country information sharing mechanism to reduce the OFDI risk.This paper comprehensively considers the macro and micro factors,and innovatively integrates the internationalization speed,doing business distance and enterprise redundancy resources of different latitudes into the research of enterprise internationalization performance,which has important effects for enriching outword foreign direct investment theories.