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Internationalization and Performance of Firms in China: Moderating Effects of Governance Structure and the Degree of Centralized Control

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  • Xiao, Simon Shufeng
  • Jeong, Insik
  • Moon, Jon Jungbien
  • Chung, Chris Changwha
  • Chung, Jaiho
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    Abstract

    This study proposes necessary modifications to the existing internationalization–performance relationship to meet the idiosyncrasies of China-specific contexts. We first hypothesize an S-shaped internationalization–performance relationship as the baseline and then investigate the moderating effects of a firm's governance structure and the degree of centralized government control on the relationship between its internationalization and performance. The results, based on a longitudinal sample of manufacturing firms in China for the 2001–2007 period, indicate that (1) the S-shaped internationalization–performance relationship holds for firms in China; (2) the governance structure moderates the internationalization–performance relationship such that increased profitability through internationalization is more likely for modernized firms than for their conventional local counterparts; and (3) the degree of centralized control moderates the internationalization–performance relationship such that increased profitability through internationalization is more likely for firms affiliated with higher level governments than for those affiliated with lower-level governments.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 19 (2013)
    Issue (Month): 2 ()
    Pages: 118-137

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    Handle: RePEc:eee:intman:v:19:y:2013:i:2:p:118-137

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    Related research

    Keywords: Internationalization; Performance; China; Governance structure; Centralized government control;

    References

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