Research On Host Country Social Trust And Cross-border Operations Of Chinese Enterprises

With the increasingly volatile global market environment,Chinese enterprises are facing higher volatility,uncertainty,complexity,and ambiguity when accelerating the pace of "going global".In order to improve the likelihood of success in multinational operations,it is particularly important for enterprises to choose management methods that are appropriate to the institutional environment of the host country.According to the three pillar division method of institutional environment,it can be divided into regulatory system,cognitive system,and normative system.The existing literature mostly focuses on the impact of the former two on multinational enterprises,while less research has been conducted on normative systems.In this study,13890 subsidiaries newly established overseas by Chinese enterprises during the period 2017-2021 were selected as research samples to construct a cross-sectional data econometric model.Using social trust data from the host country from WVS,a mixed regression analysis was conducted using STATA statistical analysis software.This paper empirically examines the mechanism and impact path of the important normative system of social trust in the host country on the important decision-making of Chinese enterprises’ transnational operations:the shareholding ratio of parent companies in overseas subsidiaries.Divide host country social trust into external group social trust and internal group social trust,respectively study how the two affect the shareholding ratio of the parent company through the path of uncertainty and transaction costs,and take the host country regulatory system and cognitive system as important boundary conditions to explore the regulatory mechanism of both on host country social trust.Empirical analysis shows that the higher the social trust level of the host foreign group,the higher the parent company tends to hold a higher proportion of shares in overseas subsidiaries,while the social trust level of the host domestic group is higher,the parent company tends to hold lower shares in overseas subsidiaries.In addition,host country regulatory systems and cognitive systems also play an important regulatory role in social trust through the path of uncertainty and transaction costs.Among them,a perfect host country regulatory system environment will weaken the positive correlation between host country foreign group social trust and parent company shareholding ratio,but will not significantly affect the negative correlation between internal group social trust and parent company shareholding ratio;The larger cultural distance between the home country and the host country will weaken the positive correlation between the social trust of the host foreign group and the shareholding ratio of the parent company,and the negative correlation between the social trust of the inner group and the shareholding ratio of the parent company will also be weakened.The results of the heterogeneity test indicate that the empirical conclusions of private enterprises are consistent with the full sample,but for state-owned enterprises,the host country’s regulatory system significantly weakens the negative correlation between social trust of the host country’s domestic groups and the shareholding ratio of the parent company.This conclusion is inconsistent with the full sample,indicating that there is heterogeneity in the regulatory role of the host country’s regulatory system on state-owned enterprises and private enterprises.The robustness test results of the replacement dependent variables indicate that the above conclusions are still valid.By revealing the theoretical mechanism by which social trust in host countries affects the control of overseas subsidiaries in transnational operations,it has both theoretical significance to deepen people’s understanding of the relationship between regulatory systems and transnational operations of enterprises,and practical significance to inspire multinational enterprises to reasonably design and adjust the ownership structure of overseas subsidiaries in accordance with the regulatory system environment of the host country.