Competitive advantage, corporate strategy, and the internationalisation of Chinese state-owned manufacturing enterprises

• Main Author: Huang, Chun-Hua
• Published: University of Strathclyde 1993
• Subjects: 658; Management & business studies
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.363432

Research on the internationalisation of the firm has focused mainly upon identifying the competitive advantage 'which enabled it to invest overseas, as well as the motives and methods of foreign entry. Strategic issues have been largely ignored in both the theoretical and empirical research. Most empirical research is based upon macro (country) and/or meso (industry) data. There have been few detailed company studies to explain the dynamic interactions between the evolution of a firm's external environment, competitive advantage, corporate strategy and its internationalisation. This thesis by employing the case study method seeks to incorporate strategic issues into an analytical framework for examining the internationalisation of the firm. It argues for a micro (corporate) and holistic approach to the analysis of internationalisation of the firm. Specifically, it argues that while home country characteristics and their evolution may influence the creation and the nature of corpor ate competitive advantages of the firm, corporate strategies play an even more decisive role in the internationalisation of the firm, especially when its international involvement has reached a certain degree. The international strategy pursued by the firm has a direct impact not only upon the speed of the firm's subsequent internationalisation, but also upon the motives, methods and modes of its foreign entry. In the past two decades, an increasing number of researchers have investigated the internationalisation of firms from the Third World or less developed countries (LDCs). In spite of China's growing importance as an outward investor, the internationalisation of Chinese firms has received scant attention. This exploratory study seeks to fill this research gap. Based upon detailed case studies of five of China's largest state-owned manufacturing companies, this research has confirmed the importance of changing corporate strategy in the dynamic interactions between changes in the firm's external environment (especially in China's domestic economy under the economic reforms and Open-Door Policy), its internal resources and capabilities and the internationalisation of its business. This research suggests that corporate strategy has played an important intermediate role between corporate competitive advantage of the firm and the internationalisation of its business. Moreover, the international strategy pursued by the firm has not only speeded its subsequent internationalisation but also enabled it to adopt bolder methods and modes of foreign market entry. Because of the difficulty in ascertaining the representativeness of the five case companies, the findings of this research are indicative instead of conclusive.