Research On Judging To The Competitive Advantage And It's Origin Of MNCs' Subsidiaries Based On Product Profitability

With the increasingly important role of the overseas subsidiaries of MNCs in theoverall development, the research about MNCs' overseas subsidiaries has been allincreasingly active research direction in foreign theoretical research related to MNCssince the 1980s. Meanwhile, the research about competitive advantage has been afocus in the research field of strategic management. So, in overseas subsidiariesgrowth strategy study, "competitive advantage" should been stressed.This doctoral dissertation focuses on MNCs'overseas subsidiaries competitiveadvantage and its origin in order to enrich and develop the theory of competitiveadvantage, overseas investment and transnational business theory, and provide thebasis for how to compete to foreign corporations, establish overseas subsidiaries forChinese enterprises and how to treat MNCs' subsidiaries in china for the Chinesegovernment.In the beginning of the dissertation, the international literature on the competitiveadvantage and its origin, MNCs and their overseas subsidiaries theory which is thenutrition to the dissertation are reviewed. The inadequacies of the internationalliterature are also pointed out.To solve the above inadequacies, firstly, the concept of competitive advantage isredefined for all enterprises generally and the criteria to measure origin ofcompetitive advantage is investigated. Thereby, the criteria to MNCs' overseassubsidiaries' competitive advantage and its origin is proposed specially. Finally, thecompetitive advantage and its origin of MNCs' subsidiaries in china is measuredthrough empirical method from the general and individual level.The concept forms of enterprise competitive advantage in previous literature aresummarized. They can be classified into three: "Performance", "potential", "capacity"theory. The dissertation expresses its "potential" trend, advocates enterprisecompetitive advantage is a comparative concept. After a series of fundamentalproblems as "what is an enterprise", "What is competition "have be answered, a new concept of enterprise competitive advantage is proposed. The new concept is, enterprise competitive advantage is a state of superiority in product profitability whenan enterprise compares with its major competitor. To facilitate the deduction of originof competitive advantage. a mathematical concept model including E,α,β,C₁,C₂,C₃,q,n is proposed. A series of concepts related "competitive advantage" as"competition potential", "competition-balance", "competitive disadvantage" ale alsodefined.Based on this definition, the dissertation proposes that enterprise competitionpotential factors Can be attributed to the internal resources domain and uncontrollableexternal environment domain. The resources domain includes material assets,financial assets, human capital, organizational knowledge, enterprise culture, socialcapital, corporate reputation, entrepreneurship, organizational ability, learningcapacity, marketing ability, manufacturing capabilities, technological innovationcapacity factors. The environment domain includes macroeconomic environment,regional environment, industry environment factors. These resource factors effect Pthroughα, effect C through C₁,C₂,C₃, effect Q through q,n, and effect Wthrough P, C, Q ultimately. These environment factors effect P throughβ, effectC through C₁,C₂,C₃, effect Q through q,n, and effect W through P, C, Qultimately. When an enterprise compares with other company, if its resource orenvironment factor meets the basic standard-contributions and the final standard-advantages, it become the origin factor of competitive advantage. This is the criteriato measure origin of competitive advantage.The above general criteria to measure competitive advantage and its origin is lsosuitable to comparison between MNCs' overseas subsidiaries with the host majorcompetitor. The 112 multinational companies in China's competitive advantage andits origin are measured. Data show that, in general, Chinese subsidiaries oftransnational corporations have a little competitive advantage comparing to localenterprises in China which are mainly the "high-cost" and "big-sales" advantages, both from the superior resources and the superior environment. Of these, assets andfunds, location, learning ability, organizational capabilities, macroeconomicenvironment, entrepreneurs, corporate reputation, social capital are the main. Twocases study about the Siemens Transformer Jinan Corporation and Beijing Coca-ColaCompany are also inspected which finds that different subsidiaries of transnationalcorporations in China have different intensity competitive advantages, differentcompetitive advantage forms and different competitive advantage origin.Based on the summary to characteristics of MNCs, large modem MNCs androles of MNCs' overseas subsidiaries, the resource access channels and specialenvironmental factors for MNCs'overseas subsidiaries are investaged, the empiricalstudy to MNCs' subsidiaries in China is also done. The empirical study finds thatsuperior resources of MNCs' subsidiaries in China are from their parent companymainly, from the internal development and international strategic alliances secondly.The empirical study also finds that the MNCs' subsidiaries "Mother" country hasgood impression on Chinese consumers, and MNCs' subsidiaries in China enjoypreferential regional and industrial policies.The above theoretical analysis and empirical research have many inspirations forChinese enterprises and the Chinese government. Chinese enterprises should createcompetitive advantage through multi-paths, multi-tools, response to the MNCs'subsidiaries in China optimistically and positively, acquire superior resources throughmulti-channel access and learn to use insight into the host environment and use theunique environmental factors in their transnational business. The Chinese governmentshould help Chinese enterprises improve the competitive advantage from bothresources and environment side, treat the MNCs' subsidiaries in China in encouragingand restricting attitude simultaneously.