Subnational institutions, managerial social ties, and Nordic firms’ performance in an Asian emerging market: Evidence from Danish investments in China

Yi Wang, Xiaosong Zheng

Publikation: Working paperForskning

Abstract

This paper provides an improved understanding of the role of guanxi, defined as informal managerial social networks, in predicting the survival of Danish firms in China. Existing literature have disagreed on the role of guanxi on firm performance and survival. While some studies found that guanxi is beneficial to firm performance, other research found a non-significant or even a detrimental effect. The present study reconciles this disagreement by addressing the moderating effect of two environmental factors at the sub-country level: industrial-level government restrictions and provincial-level marketization. China’s four decades’ economic reform and development since 1979 have resulted in significant formal and informal institutional differences at the sub-national level. This has made it possible for us to analyze whether and how have institutional variations within a single country of China influenced the survival of internationalizing firms. This study contributes to the China-specific survival literature by analyzing the impact of different types of guanxi on firm survival and its moderating effect at the sub-country level through the theoretical lens of social capital theory and institution-based view. This study also contributes to the extant literature by focusing on investments made by Danish firms. Analyzing this topic is of great importance because it helps managers of Danish firms increase the probability of survival of their foreign units in China. The list of affiliates was based on information published by the Investment Fund for Developing Countries (IFU). In total, IFU and its managed funds co-invested 141 Danish companies that entered China during the period of 1987-2017. Quantitative data will be collected via a questionnaire. The goal is to send the paper for the review process to the Asia Pacific Journal of Management or Asian Business and Management.
OriginalsprogEngelsk
StatusUnder udarbejdelse - 2020

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