Top Management Team’s Formal Network and International Expansion of Chinese Firms: The Moderating Role of State Ownership and Political ties

Jie Wu, Geoff Wood, Zaheer Khan* (Corresponding Author)

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This article explores the role of the formal network centrality of top management teams (TMT) for foreign expansion, looking at the case of Chinese firms. The former is defined by the degree to which top managers are connected with TMTs of other firms in formal ways, through service as independent board members. We explore boundary conditions, comparing state ownership with political ties. The analysis of a panel data of 489 firms expanding to 72 developed and developing host markets in the period 2000–2012 confirms that network centrality facilitates internationalization. We found that TMT network centrality had a stronger effect on internationalization in developed than emerging markets. Conversely, state ownership had a positive moderating effect in the latter and political ties a negative effect in developed ones. The literature on comparative institutional analysis suggests that formal ties are more important in developed economies, and informal ties in emerging ones. However, formal political ties and/or links to the Chinese state may be more of value in internationalizing into other emerging markets, where the balance of diplomatic power may be more skewed in China’s favor.
Original languageEnglish
Article number101803
Number of pages15
JournalInternational Business Review
Volume30
Issue number3
Early online date27 Jan 2021
DOIs
Publication statusE-pub ahead of print - 27 Jan 2021

Keywords

  • TMT network centrality
  • networks
  • state ownership
  • political ties
  • diplomatic FDI strategies
  • Chinese firms
  • Internationalization
  • Networks
  • State capitalism
  • Political ties
  • Diplomatic FDI strategies
  • State ownership

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