Entry mode choices and overseas business performance: Evidence from the Chinese multinational enterprises

Abstract

This article adopts the extended transaction cost theory to analyze the entry mode choices of Chinese multinational enterprises and their effects on overseas business performance. Theoretical hypotheses, which are developed from the perspectives of asset specificity of parent companies and investment environment differences of host countries, are tested with sample data of 406 overseas subsidiaries of Chinese multinational enterprises from 2015 to 2017. The empirical results show that the overseas subsidiaries of Chinese multinational enterprises whose entry mode choices can be predicted by the extended transaction cost theory usually perform significantly better than those whose entry mode choices cannot be predicted by the extended transaction cost theory.