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Simultaneous Impact of the Presence of Foreign MNEs on Indigenous Firms’ Exports and Domestic Sales

Jue Wang, Yingqi Wei (), Xiaming Liu, Chengang Wang and Hua Lin
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Jue Wang: Southwestern University of Finance and Economics
Xiaming Liu: Birkbeck College, University of London
Hua Lin: Southwestern University of Finance and Economics

Management International Review, 2014, vol. 54, issue 2, No 3, 195-223

Abstract: Abstract Incorporating the global production network approach and competitor analysis, this paper establishes an analytical framework with two hypotheses for the role of foreign multinational enterprises (FMNEs) in indigenous firms’ exports and domestic sales. First, the presence of FMNEs as a whole is likely to have a negative impact on indigenous firms’ domestic sales but a simultaneous positive impact on their exports in an emerging economy like China. Second, the presence of MNEs from Hong Kong, Macau and Taiwan (HMT MNEs) is more likely to generate this pattern of impact than MNEs from other countries (Other FMNEs). The foreign direct investment-led export strategy contributed to the dominance of the scenario described by the first hypothesis in China, while a higher degree of market commonality and resource similarity of HMT MNEs with that of indigenous Chinese firms than Other FMNEs leads to the second hypothesis. These novel hypotheses are tested and supported by a very large and recent firm-level panel dataset from Chinese manufacturing.

Keywords: Global production network approach; Competitor analysis; Presence of foreign MNEs; Domestic sales; Exports; Indigenous Chinese firms (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11575-013-0195-y

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