ny Li Sun

Sub-National Institutional Contingencies, Network Positions, and IJV Partner Selection

The differences in sub‐national institutions within large and complex emerging economies have been increasingly noted. Drawing on social network theory and the institution‐based view, we argue that two network structural attributes of domestic firms – centrality and structural holes – have distinctive values in different sub‐national regions where institutional contexts differ widely. In addition, these sub‐national institutional contingencies influence the attractiveness of different network attributes to foreign entrants seeking international joint venture (IJV) partners. Specifically, in regions where the degree of marketization is high, centrally positioned domestic firms are more likely to be selected by foreign entrants as IJV partners. In regions where the degree of marketization is low, domestic broker firms are more attractive IJV partners. Results from the electrical and information technology industries in 18 provinces in China largely support our hypotheses.

Internationalization Strategy of MNEs from Emerging Economies: The Case of Huawei

With the current rise of multinational enterprises (MNEs) from emerging economies (EE), more attention is now being directed to EE MNEs and what drives the internationalization of these companies. In this article we aim to provide more insights into the strategies and development of EE MNEs by conducting an in‐depth study of a Chinese high‐tech company in the communications equipment industry: Huawei. Our case study proposes that EE MNEs (1) tend to nurture their capability in the domestic market as a base before internationalization; (2) prefer to enter markets with fewer barriers in cultural, technological, economic, and institutional distances to accumulate experience and move up the value curve; and (3) use inward and outward linkages to complement their strengths and offset their weaknesses in the global market. Our study on the internationalization patterns of EE MNEs enriches and broadens current MNE theory.

Enhancing Innovation Through International Joint Venture Portfolios: From the Emerging Firm Perspective

Anecdotal evidence continues to suggest that many firms in emerging economies (EEs) lack innovation. To investigate how these firms might improve their innovation, the authors integrate resource dependence theory with network theory and the resource-based view to theorize that EE firms can advance their innovation by configuring their international joint venture (IJV) portfolio characteristics at the network and focal firm levels. The results indicate that an EE firms innovation improves when structural hole positions in its IJV portfolio increase but decreases when network centrality increases. Such relationships are further contingent on two focal firm-level IJV portfolio characteristics: IJV portfolio size and IJV portfolio resource commitment.

The social responsibility of international business scholars

Purpose – The paper aims to argue that the social responsibility of international business (IB) scholars is to seek truth, disseminate learning, and make a difference on issues crucial to the global economy.Design/methodology/approach – Instead of making philosophical and abstract arguments on the importance of the social responsibility of IB scholars, this article focuses on a leading debate of the times: how to view the rise of Chinas outward foreign direct investment (OFDI)? The article argues that the so‐called “China threat” brought by such OFDI, as it is often portrayed by the (Western) media, is a myth that cannot be substantiated by evidence‐based scholarly analysis.Findings – At present, Chinas OFDI stock represents a mere 1.21 percent of global OFDI stock. It would be absurd to believe that such a tiny sum can “buy up the world”. Based on findings, three hypotheses on what is behind the myth about Chinas OFDI are offered.Practical implications – Although some IB (and management) scholarships ...

Cutting Microfinance Interest Rates: An Opportunity Co‐Creation Perspective

Microfinance is a social innovation to alleviate poverty by providing small, unsecured loans to local indigent entrepreneurs. Many borrowers use microfinance loans to seed their small entrepreneurial businesses. However, high interest rates charged by microfinance institutions (MFIs) are likely to increase the financial burden of those borrowers. In this study, we adopt an opportunity co–creation perspective to analyze the factors that affect microfinance interest rates. We argue that new opportunities in a social venture could be co–created by multiple stakeholders, including MFIs, borrower communities, female borrowers, governments, MFI managers, and employees. We tested our hypothese on interest rate setting of MFIs by using 4,187 organization–year observations from 2003 to 2011 across 93 countries, and the empirical results largely support the hypotheses. Our opportunity co–creation perspective extends the current understanding on microfinance and provides important managerial implications.

Institutional fragility and outward foreign direct investment from China

We develop the concept of institutional fragility to investigate the outward foreign direct investment (OFDI) behavior of firms from emerging economies. When different dimensions of institutions are not progressing at the same pace, internal friction and conflict arise during institutional development. Such fragility could push a firm to escape its home country as a strategic response. Using a sample of 578,360 Chinese firm-year observations over a 10-year period, we find that institutional fragility at the provincial level is associated with increased OFDI decision. This relationship is weaker when firms have high productivity or have been controlled by state with high ownership, stronger when firms have a high level of export network. Overall, our institutional fragility perspective extends and enriches the institution-based view and offers new insights into OFDI behavior.RésuméNous développons le concept de fragilité institutionnelle pour étudier le comportement d’investissement direct étranger sortant (IDES) des entreprises de pays émergents. Lorsque différentes dimensions institutionnelles ne progressent pas au même rythme, des conflits et des frictions internes surviennent au cours du développement institutionnel. En réponse stratégique, cette fragilité pourrait inciter une entreprise à quitter son pays d’origine. Utilisant un échantillon de 578 360 observations d’entreprises chinoises sur une période de 10 ans, nous constatons que la fragilité institutionnelle au niveau régional est liée à l’augmentation des décisions d’IDES. Cette relation est plus faible lorsque les entreprises ont une productivité élevée ou ont été contrôlées par l’Etat avec un fort degré de propriété, elle est plus forte lorsque les entreprises ont un réseau d’exportation très développé. Dans l’ensemble, notre point de vue sur la fragilité institutionnelle élargit et enrichit la perspective institutionnelle et offre de nouveaux éclairages sur le comportement relatif aux IDES.ResumenDesarrollamos el concepto de fragilidad institucional para investigar el comportamiento de la salida de inversión extranjera directa (SIED) de empresas de economías emergentes. Cuando diferentes dimensiones de instituciones no están progresando al mismo ritmo, fricción interna y conflicto surge durante el desarrollo institucional. Esta fragilidad pudiera presionar a una empresa a escapar de su país de origen como una respuesta estratégica. Usando una muestra de 578.360 observaciones anuales de empresas chinas en un período de 10 años, encontramos que la fragilidad institucional a nivel de provincia se asocia a un aumento de la decisión de la SIED. Esta relación es más débil cuando las empresas tienen alta productividad o han sido controladas por el estado con alta propiedad, más fuerte con las empresas tienen una red de exportaciones de alto nivel. En general, nuestra perspectiva de fragilidad institucional amplia y enriquece el enfoque vasado en recursos y ofrece nuevos aportes en el comportamiento de la SIED.ResumoDesenvolvemos o conceito de fragilidade institucional para investigar o comportamento do investimento direto externo para o exterior (OFDI) de empresas de economias emergentes. Quando as diferentes dimensões das instituições não progridem no mesmo ritmo, atrito interno e conflitos surgem durante o desenvolvimento institucional. Tal fragilidade poderia impulsionar uma empresa para escapar de seu país de origem como uma resposta estratégica. Utilizando uma amostra de 578.360 observações firma-ano chinesas durante um período de 10 anos, verificamos que a fragilidade institucional a nível provincial está associada a uma maior decisão de OFDI. Essa relação é mais fraca quando as empresas têm alta produtividade ou o Estado tem um maior controle sobre a sua propriedade, e mais forte quando as empresas possuem uma rede de exportação de alto nível. Em geral, a nossa perspectiva de fragilidade institucional estende e enriquece a visão baseada em instituições e oferece novos insights sobre o comportamento do OFDI.概要根据新兴经济体公司的对外直接投资(OFDI)行为, 我们提出制度脆弱性的概念。当制度的不同维度没有以相同的速度发展时, 制度发展中就会出现内部摩擦和冲突。这种制度脆弱性会促使公司将从母国逃避作为一种战略反应。我们 在578360个中国公司-年度10年间的观察 样本中, 发现省级的制度脆弱性会增加OFDI决策。当公司具有高生产率或有高比例的国有企业所有权时,这种关系变弱; 当企业具有高水平的出口网络时,这种关系变 强。总体而言, 我们制度脆弱性的观点扩展并丰富了制度基础观, 并提供了对OFDI行为的新见解。

Morphing: The Linkage of Inward Private Equity and Outward Ventures

Private equity is impacting global economies and competitive landscapes of multinational enterprises (MNEs). In this pioneer research, we first find an important new pattern of globally interfirm connections: the inward private equity investment likes to promote Chinese firms’ outward venture, or an inward-outward linkage. Under this inward-outward linkage, after received investment from private equity, Chinese emerging MNEs are likely to restructure board, rebuild the top management team, reconfiguring resource, reframe the industry structure and alter competitive dynamics, thus, modify their strategies in outward ventures, such as accelerating the internationalization speed, locating more outward ventures in developed economies, and engaging complex entry modes, especially cross-border M&As. We called the emergence of this new species of MNEs as a “morphing” metaphor, with in-depth seven case studies, including Lenovo, Zoomlion, Geely, Alibaba.com, Huawei, NVC lighting, and BYD.

Qihoo 360: building a “free” business model

Synopsis This case discusses Qihoo 360’s free business model, how it used this free model to overpower competitors, and how the model evolved over time. Qihoo 360 is a company that took just six years to become a company listed on the New York Stock Exchange (with a market value of over US

Micro-Innovation Strategy: The Case of WeChat

2 billion). At Qihoo 360’s Initial Public Offering (IPO) at the New York Stock Exchange (NYSE), Qihoo’s founder Zhou Hongyi reflected on how Qihoo’s free business model had brought its current success and speculates on its future challenges. Research methodology The authors used both secondary data and field interviews when preparing this case. After reading through various company reports, competitor information, and financial filings, the authors interviewed five top manager team (TMT) members of Qihoo 360, three TMT members of its competitors, and two partners of venture capital investors who have invested in these companies in Beijing or Shenzhen during the last three years. The authors collected 347 media reports ...

Corporate governance and organizational survival under punctuational change

Tencent was the third-largest Internet company in the world, behind Google and Amazon. Tencent’s primary product, WeChat, was the world’s four-largest mobile messaging apps. This case discusses how Tencent used micro-innovation strategy to develop and improve its product, WeChat, as well as manage its powerful competition. It also discusses Tencent’s innovative strategies such as functional additions through micro-innovation, reverse micro-innovation by subtraction, and strategic alliances for internationalization, among others.