‘2R-Based View’ on the Internationalization of Service MNEs from Emerging Economies: Evidence from China

Abstract

This study combines the resource-based view of the firms and region-based view of the strategy (i.e., a 2R-based view) to shed light on the crucial roles of firmspecific resources and region-specific heterogeneity within the context of China, a large emerging economy. The study explains the variations in internationalization levels among service multinational enterprises (MNEs). Based on a large sample analysis of Chinese service MNEs, our findings demonstrate that MNEs with good cost efficiency and few intangible resources exhibit great propensity for international expansion, thereby achieving high internationalization level. Chinese service MNEs located in a coastal region or a region with well-developed institutional environments achieve high internationalization level as well. These findings support a U-shaped relationship between the internationalization of service MNEs and their performance. Our research findings confirm our predictions from the 2R-based view, which provides valuable insight into the regional development and international strategy of MNEs from emerging economies.

Product Newness, Low Competition, Recent Technology, and Export Orientation as Predictors for Entrepreneurial Growth Aspirations

“…However, not only multinationals are internationally-oriented, as new and smaller firms are, using the latest technologies for increasingly broadening the scope of their business. Exporting is the first and most common step for a firm's international expansion [83][84][85], including new foreign ventures [80]. An increasing number of startups pursue global markets [86][87][88], especially in Asia and Europe.…”

Cultural distance and customer orientation strategy of Chinese service MNEs under the belt and road initiative

“…The main characteristics of serviceoriented MNEs are service-based, highly intensive research and development (R&D) activities, and a high level of added value. Chinese service MNEs are still in the initial stage of global resource integration, global industrial layout, and so on, with most having a relatively low level of internationalisation (Xiao et al, 2019). Besides, many countries along the BRI have emerging economies with different types of natural resources and diverse social, political and cultural beliefs.…”

Chinese Service Multinationals: The Degree of Internationalization and Performance

“…However, despite the substantial body of empirical attempts, statistical findings continue providing inconclusive results. These include positive (Rugman et al 2008), negative (Denis et al 2002), and nonsignificant linear effects (Tallman and Li 1996), and wide variations in types of curvilinear, such as U-curve (Xiao et al 2019), S-curve (Lu and Beamish 2004) and inverted S-curve relationships (Chiang and Yu 2005) (for a comprehensive review, see Nguyen 2017;Nguyen and Kim 2020). Until now, the dominant approaches to explain these divergent results have been either methodological refinement, such as the selection of different multinationality and performance measures, or the incorporation of different sets of moderators that capture firm-, country-and industryspecific characteristics (Geleilate et al 2016;Kirca et al 2011Kirca et al , 2016Shin et al 2017).…”

“…On the other hand, service sector is different from manufacturing sector in numerous features, such as the intangibility of offerings, and the inseparability and perishability of the production and consumption process (Buckley et al 1992;Meyer et al 2015). Such features require the FSAs of service MNEs to be host market-specific and locally embedded, or host countrybound that represent disincentives to improve performance (Xiao et al 2019). In this study, we find that it is often challenging for Chinese service firms to develop new LB FSAs in host countries, which are essential to achieve foreign sales and superior performance in overseas operations.…”

“…Third, we contribute to the literature on the internationalization of Chinese service firms which has been scarcely researched. Bai et al (2019) and Xiao et al (2019) are among the first endeavours to study the determinants of Chinese service's internationalization. However, they did not consider the overall degree of multinationality of Chinese service firms before calling them MNEs, which is a common mistake in the extant literature on Chinese firms' internationalization (Rugman et al 2016).…”