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The Impacts of Investments in China and Brand-Developing Potential on Operating Performances - The Evidence of Taiwan's Information-Electronics Industry

Author

Listed:
  • Jwu-Rong Lin

    (Department of International Business, Tunghai University, Taiwan)

  • Kuo-Hsiung Chang

    (Department of International Business, Tunghai University, Taiwan)

  • Chi-Sheng Hsu

    (Department of International Business, Tunghai University, Taiwan)

  • Hsiu-Chen Wu

    (Executive Master of Business Administration, Tunghai University, Taiwan)

  • Chia-Wei Kang

    (Department of Psychology, National Chengchi University, Taiwan)

Abstract

This paper examines the influence of investments in China and brand-developing potential on operating performances (technical efficiency, return on assets, and Tobin's Q) with data drawn from samples of listed information-electronics industry firms in Taiwan between 1999 and 2003. We first apply non-paired t-tests to examine if there is a difference in operating performance between sample firms with investments in China and those without investments in China. Then, using R&D and advertising intensities as proxies for branding-developing potential, we construct regression models to evaluate the impacts of investments in China and brand-developing potential on operating performances. We conclude that (1) the technical efficiency of Taiwan's information-electronics industry increased year by year, but the value of Tobin's Q decreased year by year; (2) on average, sample firms with both investments in China and brand-developing potential have higher Tobin's Q than other sample firms, indicating that investment strategies in China and brand developing can enhance growth opportunities; (3) we conclude that in the era of trifling profit, in addition to reallocating internal resources to enhance technical efficiency, sample firms can increase long-run performance by adopting investment strategies in China and by developing brand recognition. However, in the short run, sample firms must overcome the operating barrier of foreign liability and brand investment when they directly invest in China and develop brand recognition.

Suggested Citation

  • Jwu-Rong Lin & Kuo-Hsiung Chang & Chi-Sheng Hsu & Hsiu-Chen Wu & Chia-Wei Kang, 2007. "The Impacts of Investments in China and Brand-Developing Potential on Operating Performances - The Evidence of Taiwan's Information-Electronics Industry," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 3(1), pages 17-48, January.
    • Handle: RePEc:jec:journl:v:3:y:2007:i:1:p:17-48
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    More about this item

    Keywords

    information-electronics industry; investments in China; brand-developing potential; operating performance;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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