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Internationalization within networks: Exploring the relationship between inward and outward FDI in China’s auto components industry

Author

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  • Peter Hertenstein

    (University of Cambridge)

  • Dylan Sutherland

    (Durham University)

  • John Anderson

    (University of Northern Iowa)

Abstract

We explore how the outward FDI strategies of Chinese auto component multinational corporations (MNCs) are shaped by sub-contracting supply relationships established with developed market MNCs. We argue the strong presence of foreign MNC business networks developed through prior inward FDI constitutes an important home country effect influencing the outward FDI strategies of emerging market MNCs. Using the updated internationalization process model, we show how commitment to business networks is a critical mechanism driving the internationalization trajectories of Chinese auto component MNCs. This includes geographic location choices to psychically distant developed markets, strategic asset seeking orientation, pace of internationalization, and entry mode decisions.

Suggested Citation

  • Peter Hertenstein & Dylan Sutherland & John Anderson, 2017. "Internationalization within networks: Exploring the relationship between inward and outward FDI in China’s auto components industry," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 69-96, March.
    • Handle: RePEc:kap:asiapa:v:34:y:2017:i:1:d:10.1007_s10490-015-9422-3
    DOI: 10.1007/s10490-015-9422-3
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    References listed on IDEAS

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