The Effect Of Organizational Capabilities On Behavior Mode Of Foreign Market Entry And International Performance In China

Since implementing reform and open policies, China has made a great achievement in the global market. As the third top trade country and 'world factory', China has built her leading position in the international market. However, the relevant research into Chinese firms' international mode and performance has been underdevelopment. Theoretically, the existing studies place their emphases on inward internationalization of Chinese firms, lacking of focusing on their outward internationalization. Methodologically, the domestic scholars mainly use theoretic deduction and case study; few empirical papers have been presented. Within the line of reasoning, Chinese firms' international movement and performance are still ambiguity. To offset the situation, the paper seeks to provide insight on how Chinese exporting firms choose entry modes and what performance they achieve and which internal capabilities have impact on the mode decision and performance.Drawing upon organization capabilities view to strategic management, the paper tries to explore the relationship among organization capabilities, entry mode and performance, via analyzing the source of capabilities, the mechanism of transferring and renewing of capabilities and how capabilities become competitive advantage. By building upon the conceptual framework, the paper empirically tests: (1) how organization capabilities measured by foreign experience, human resource and technical innovation influence on foreign market selection and entry mode; (2) how organization capabilities influence on Chinese firms' international performance; (3) how entry modes influence international performance. The data are collected by using 329 Chinese listed manufacturing firms, 2001-2005. The result suggests that: (1) size, foreign experience and appearance patent have significantly positive impacts on foreign market selection, which measured by cultural distance; (2) size, industry, ownership, foreign experience and appearance patent have significantly positive impact on entry mode; (3) size, foreign experience and appearance patent have significantly positive impact on foreign sale volume, while the ratio of educated stuff and new technical patent have negative impacts on the volume; (4) area, industry and the experience of domestic joint venture are the important factors to promote the increasing ratio of foreign sale. The author suggests that while organization capabilities do have important impacts on entry mode and performance, the influence of the external factors should not be ignored.Finally, the paper presents the conclusions and proposals for Chinese government and firms for reference.