THESIS
2020
ix, 114 pages : illustrations ; 30 cm
Abstract
The two essays in this thesis examine how state-owned and privately-owned domestic
Chinese firms influenced foreign subsidiary performance in a transition economy. Earlier
research into spillovers from foreign direct investment (FDI) examines how FDI influences
the performance and strategy of domestic firms in emerging markets. Less attention has been
paid to how domestic firms influence performance and strategy of foreign firms. During an
economic transition, especially, different types of domestic firms and firms with divergent
institutional logics coexist. Thus, different types of domestic firms bring disparate
opportunities and threats that influence the performance of foreign subsidiaries. This thesis
examines “survival” and “product innovation” as aspects of performance of...[
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The two essays in this thesis examine how state-owned and privately-owned domestic
Chinese firms influenced foreign subsidiary performance in a transition economy. Earlier
research into spillovers from foreign direct investment (FDI) examines how FDI influences
the performance and strategy of domestic firms in emerging markets. Less attention has been
paid to how domestic firms influence performance and strategy of foreign firms. During an
economic transition, especially, different types of domestic firms and firms with divergent
institutional logics coexist. Thus, different types of domestic firms bring disparate
opportunities and threats that influence the performance of foreign subsidiaries. This thesis
examines “survival” and “product innovation” as aspects of performance of foreign
subsidiaries, separately.
The first essay draws upon literature on inter-organizational dynamics and the liability of
foreignness to investigate how state-owned enterprises (SOEs) and domestic privately-owned
enterprises (POEs) affect the survival of foreign-owned enterprises (FOEs) in a transition
economy. Analysis of panel data for Chinese manufacturing firms spanning 1998–2006 shows
that the local density of SOEs has a positive relationship with the risk of failure of FOEs,
whereas the local density of POEs has a U-shaped relationship with FOE exit risk. An FOE’s strategic choices on resource allocation, ownership, and location affect those relationships.
The second essay draws upon literature on institutional logics and the resource
dependence theory to examine how SOEs and POEs affect the innovation of FOEs in a
transition economy. Analyzing panel data for a technology park in China spanning 2008–2015
reveals that the intensity of industry-level research and development (R&D) among SOEs has
a positive relationship with innovation by foreign subsidiaries, whereas the intensity of
industry-level R&D among POEs has a negative relationship with innovation by foreign
subsidiaries. The above relationships are contingent on time period, industry characteristics
and FOEs’ strategic choices.
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