A corporate entrepreneurship perspective of pre‐entry strategies for internationalization: A case study of a Chinese business conglomerate

• Author: Mingqiong M. Zhang,Zhenxiong Chen,Helen De Cieri,Peter J. Dowling,Cherrie J. Zhu
• Published date: 01 March 2019
• Date: 01 March 2019
• DOI: http://doi.org/10.1002/tie.22030

AREA PERSPECTIVES: ASIA AND SOUTH-EAST ASIA

A corporate entrepreneurship perspective of pre-entry

strategies for internationalization: A case study of a Chinese

business conglomerate

Mingqiong M. Zhang

1

| Cherrie J. Zhu

1

| Helen De Cieri

1

| Peter J. Dowling

2

|

Zhenxiong Chen

3

1

Department of Management, Monash

University, Melbourne, Victoria, Australia

2

School of Management, La Trobe University,

Melbourne, Victoria, Australia

3

Research School of Management, ANU

College of Business and Economics, The

Australian National University, Canberra,

Australia

Correspondence

Mingqiong M. Zhang, Department of

Management, Monash University, VIC. 3800,

Australia.

Email: mike.zhang@monash.edu

Funding information

Australian Research Council's Linkage Projects,

Grant/Award Number: LP110200526

The international expansion of Chinese firms is a remarkable phenomenon of contemporary

international business. However, international expansion is particularly challenging for firms

expanding from emerging market economies such as China because they have relatively few

ownership advantages and suffer disadvantages. We apply a corporate entrepreneurship per-

spective to explore this under-researched topic via a longitudinal case study of a large Chinese

business conglomerate. Thirty-one semistructured interviews and seven focus-group discus-

sions were conducted with 55 informants; company documents were also analyzed. We found

sophisticated pre-entry entrepreneurial initiatives are critical for successful internationalization,

as they enable emerging market firms to overcome some constraints, leverage their assets, and

build competences for international venturing.

KEYWORDS

China, corporate entrepreneurship, emerging market economies, internationalization,

multinational enterprise, pre-entry strategy

1|INTRODUCTION

Since China initiated its “going global”strategy in 1999 (Child & Rodri-

gues, 2005), its outward foreign direct investment (OFDI) has experi-

enced exponential growth (Voss, Buckley, & Cross, 2010; Wei, 2010).

By the end of 2015, more than 20,200 Chinese companies had estab-

lished 30,800 overseas subsidiaries in 188 countries or regions,

employing 1.23 million of local staff. With total assets of Chinese for-

eign affiliates over US$ 4.37 trillion, China ranked eighth among all

economies in terms of outward foreign direct investment (FDI) stock

(MOFCOM, 2016) and produced the highest foreign investment out-

flow among all developing nations in the past few years (UNCTAD,

2015). The internationalization of Chinese firms has become “one of

the most profound business phenomena of the last decade”and the

study of this phenomenon is a way “to extend existing theories and

potentially develop new theories”(Deng, 2013, p. 514).

Scholars in the field of international business (IB) tend to assume,

given their short history of international expansion, Chinese multina-

tional enterprises (MNEs) lack firm-specific advantages compared with

their Western counterparts (Kling & Weitzel, 2011; Sun, 2009). Fur-

thermore, as latecomers in the global business, Chinese MNEs would

face more challenges than those from developed countries (Alon,

Yeheskel, Lerner, & Zhang, 2013; Fang & Chimenson, 2017; Jormanai-

nen & Koveshnikov, 2012). Given fewer advantages and more chal-

lenges, the process of accelerated internationalization by Chinese

MNEs has attracted considerable research attention, including the

OFDI motivations (Athreye & Kapur, 2009; Luo, Sun, & Wang, 2011),

determinants (Buckley et al., 2007), the impact of institutional envi-

ronment (Cui & Jiang, 2012; Liang, Ren, & Sun, 2015), and postentry

strategies (Fan, Cui, Li, & Zhu, 2016). In contrast, understanding of a

further dimension to this process, that is, pre-entry preparation,

remains incomplete (Deng, 2012, 2013; Zahra & George, 2002; Zheng,

Khavul, & Crockett, 2012). Despite consensus that internationalization

should be viewed as a process, we know little about the way Chinese

firms prepare for internationalization (Sun, 2009; Yang, Jiang, Kang, &

Ke, 2009), as scholars tend to believe Chinese firms can only obtain

their ownership advantages after commencing international opera-

tions (Jormanainen & Koveshnikov, 2012; Wei, 2010). Another issue

DOI: 10.1002/tie.22030

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