“Rushing in where angels fear to tread”?. The early internationalization of indigenous Chinese firms
| Pages | 163-177 |
| DOI | https://doi.org/10.1108/17544400910994742 |
| Published date | 02 October 2009 |
| Date | 02 October 2009 |
| Author | Wim Naudé |
| Subject Matter | Economics |
Indigenous
Chinese firms
163
Journal of Chinese Economic and
Foreign Trade Studies
Vol. 2 No. 3, 2009
pp. 163-177
#Emerald Group Publishing Limited
1754-4408
DOI 10.1108/17544400910994742
‘‘Rushing in where angels
fear to tread’’?
The early internationalization of
indigenous Chinese firms
Wim Naude
´
World Institute for Development Economics Research,
United Nations University, Helsinki, Finland
Abstract
Purpose – The purpose of this paper is to determine whether there are empirical differences in the
extent and motivation of early internationalisation between indigenous and foreign-invested Chinese
firms.
Design/methodology/approach – Data on 3,948 firms surveyed by the World Bank in 2002 and
2003 in China are used and four hypotheses are tested using reg ression analysis.
Findings – Despite having started with internationalisation relatively more recently than most
foreign-invested firms, and having less foreign experience, indigenous firms which internationalise
early perform better than foreign-invested firms.
Research limitations/implications – The data were not gathered with international
entrepreneurship in mind, may not include all relevant control variables, and lack a panel.
Originality/value – China is a country noted for its success in internationalisation. However, this
has been due, in the most part, to foreign-invested firms, with indigenous firms seemingly being less
successful. This makes knowledge of the differences in early internationalisation behaviour of
indigenous versus foreign-invested firms potentially interesting.
Keywords International business, Exports, China, Entrepreneurialism, Business formation
Paper type Research paper
1. Introduction
In recent years, the ‘‘born global’’ phenomenon has attracted increasing attention. ‘‘Born
global’’ refers to the early internationalisation of new firms (McDougalland Oviatt, 2003).
This most often takes the form of a firm exporting or establishing a foreign presence,
within the first three years after its start-up. Since the early 1990s, an increasing number
of firms are being ‘‘born global’’, including small firms. Researchers have offered
explanations for the increased early internationalisation of firms; these stress the
facilitating role which advances in information and communication technologies and
globalisationhave played in internationalisation. Two majorstrands of explanations can
be distinguished.The first is that many young firms internationalise to escape a difficult
domestic environment. For instance, many domestic markets are characterised by
intense competition, restrictive regulations and various industry-level obstacles,
including the need to recoupR&D investments (Alon and Lerner, 2008; Witt and Lewin,
2007; Autioet al., 2000).
A second explanation for the born global phenomenon is that firms go global at a
young age for strategic reasons. In particular, they want either to exploit their firms’
capabilities and competitive advantages, or to strengthen these through the knowledge
and learning obtainable from international markets (Oviatt and McDougall, 1994;
Westhead et al., 2001). In this view, early internationalisation is largely the result of an
entrepreneurial firm’s strategic intent (Autio et al., 2000). Empirical evidence, mostly
from advanced economies, suggests that firms which internationalise early will achieve
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