Competitive position, managerial ties, and profitability of foreign firms in China: an interactive perspective

Julie Juan Li, Zheng Zhou and Alan T Shao
Additional contact information
Julie Juan Li: Department of Marketing, City University of Hong Kong, Kowloon Tong, Hong Kong
Alan T Shao: Department of Marketing, Belk College of Business, University of North Carolina at Charlotte, Charlotte, USA

Journal of International Business Studies, 2009, vol. 40, issue 2, 339-352

Abstract: Despite the prominence of the competitive strategy perspective, it remains unclear whether foreign firms entering China can still adopt a differentiation or low-cost position to achieve superior performance, given the unique market and institutional environments in China. Alternatively, should foreign firms follow conventional wisdom and actively build managerial ties with government officials and business community to enhance their performance? This study develops and tests an interactive perspective that highlights the moderating effects of managerial ties on competitive position–performance relationships. The results indicate that though both differentiation and low-cost positions foster foreign firm profitability, the benefit of a differentiation position is conditional on political and business ties in different directions: political ties impede and business ties strengthen the positive effect of a differentiation position on foreign firms' profitability. Moreover, foreign firms benefit from their use of business ties, but their profitability suffers when they rely increasingly on the heavy use of political ties. Journal of International Business Studies (2009) 40, 339–352; doi:10.1057/jibs.2008.76

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (85)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v40/n2/pdf/jibs200876a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v40/n2/full/jibs200876a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:40:y:2009:i:2:p:339-352

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().