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The performance of cross-border units in China: a test of natural selection, strategic choice and contingency theories


  • J Child

    (Birmingham Business School, University of Birmingham, UK)

  • L Chung

    (St John's College, University of Cambridge, UK)

  • H Davies

    (Department of Business Studies, The Hong Kong Polytechnic University, Hong Kong)


This study tests the explanatory power of three theoretical frameworks for the performance of cross-border affiliates, by examining the experience of 615 Hong Kong firms managing operations in mainland China. The frameworks tested are: the natural selection approach, focused on the influence of the environment; the strategic choice approach, focused on managerial action; and the contingency approach, which emphasises the ‘fit’ between environmental contingencies and internal organisation. The results show that natural selection and strategic choice have a role to play, even when controlling for each other. They also support a simple approach to contingency, but not a more complex version involving interactions. Although the business and institutional environments do have a significant influence on the performance of cross-border affiliates in a transition economy, performance can be improved through strategic managerial action. In particular, leveraging local resources by developing trust between parent and affiliate, and maintaining close control and integration with the parent, are associated with enhanced performance. Journal of International Business Studies (2003) 34, 242–254. doi:10.1057/palgrave.jibs.8400033

Suggested Citation

  • J Child & L Chung & H Davies, 2003. "The performance of cross-border units in China: a test of natural selection, strategic choice and contingency theories," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(3), pages 242-254, May.
  • Handle: RePEc:pal:jintbs:v:34:y:2003:i:3:p:242-254

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    3. Shou, Zhigang & Chen, Jun & Zhu, Wenting & Yang, Lihua, 2014. "Firm capability and performance in China: The moderating role of guanxi and institutional forces in domestic and foreign contexts," Journal of Business Research, Elsevier, vol. 67(2), pages 77-82.
    4. Muethel, Miriam & Hoegl, Martin, 2012. "The influence of social institutions on managers’ concept of trust: Implications for trust-building in Sino-German relationships," Journal of World Business, Elsevier, vol. 47(3), pages 420-434.
    5. Demirbag, Mehmet & Apaydin, Marina & Tatoglu, Ekrem, 2011. "Survival of Japanese subsidiaries in the Middle East and North Africa," Journal of World Business, Elsevier, vol. 46(4), pages 411-425, October.
    6. repec:eee:jbrese:v:76:y:2017:i:c:p:98-107 is not listed on IDEAS
    7. Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W., 2009. "Equity-based entry modes of emerging country multinationals: Lessons from Turkey," Journal of World Business, Elsevier, vol. 44(4), pages 445-462, October.
    8. Demirbag, Mehmet & Glaister, Keith W. & Tatoglu, Ekrem, 2007. "Institutional and transaction cost influences on MNEs' ownership strategies of their affiliates: Evidence from an emerging market," Journal of World Business, Elsevier, vol. 42(4), pages 418-434, December.
    9. Costa e Silva, Susana & Bradley, Frank & Sousa, Carlos M.P., 2012. "Empirical test of the trust–performance link in an international alliances context," International Business Review, Elsevier, vol. 21(2), pages 293-306.
    10. Sheng, Shibin & Zhou, Kevin Zheng & Lessassy, Leopold, 2013. "NPD speed vs. innovativeness: The contingent impact of institutional and market environments," Journal of Business Research, Elsevier, vol. 66(11), pages 2355-2362.
    11. Naoki Ando & Daniel Z. Ding, 2014. "An integrative institutional approach to MNC performance in China," Asia Pacific Business Review, Taylor & Francis Journals, vol. 20(4), pages 541-557, October.
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    14. Jia, Flora Fang & Wang, Jeff Jianfeng, 2013. "Marketing channel relationships in China: A review and integration with an institution-based perspective," Journal of Business Research, Elsevier, vol. 66(12), pages 2545-2551.
    15. Laura Poppo & Kevin Zheng Zhou & Julie J. Li, 2016. "When can you trust “trust”? Calculative trust, relational trust, and supplier performance," Strategic Management Journal, Wiley Blackwell, vol. 37(4), pages 724-741, April.
    16. Demirbag, Mehmet & Tatoglu, Ekrem & Glaister, Keith W., 2007. "Factors influencing perceptions of performance: The case of western FDI in an emerging market," International Business Review, Elsevier, vol. 16(3), pages 310-336, June.
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    20. Hemmert, Martin & Kim, DaeSoo & Kim, Jisun & Cho, BooYun, 2016. "Building the supplier's trust: Role of institutional forces and buyer firm practices," International Journal of Production Economics, Elsevier, vol. 180(C), pages 25-37.
    21. Piaskowska, D., 2005. "Essays on firm growth and value creation," Other publications TiSEM 89053610-79c6-4c52-9d1c-6, Tilburg University, School of Economics and Management.

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