Global Manufacturing Network, Network Embeddedness On Firm Performance

With the acceleration of the globalization process, as well as the formation and development of the Global Production Networks (GPN), the competence of a firm not only depends on the resources it owns, but also on resources and capabilities inimitable by others. Meanwhile, the level of embeddedness in different networks deeply influences the acquisition of such resources and capabilities, and the influence study of firm network embeddedness on firm behavior and performance has been a new research focus. The rapid development of Chinese manufacturing industry in the past twenty years largely benefited from the globalization of manufacturing, because this granted the Chinese manufacturing companies great opportunities to acquire various kinds of network resources so as to enhance the performance. In this paper, we study the influencing mechanism of local firm network embeddedness on firm performance, based on the Global Production Networks (GPN) and with local Chinese manufacturing companies as our study objects.Based on the relevant research of firm network embeddedness, we put forward the conceptual framework of firm networks positively influencing the knowledge acquisition and further the firm performance enhancement while being moderated by the potential absorptive capacity and realized absorptive capacity. Then we apply the factor analysis and multiple regression analysis of the datas collected from 128 manufacturing companies in China to test and analyze the conceptual framework. After the qualitative and quantitative analysis, we come to the following conclusions:(1) In the Global Production Networks (GPN), the level of trust, information sharing, and joint problem solving of the local network embeddedness positively and significantly influence the enterprise performance.(2) In the Global Production Networks (GPN), the knowledge acquired by local companies from international flag companies has mediating effect on the relationship between network embeddedness and enterprise performance.(3) In the Global Production Networks (GPN), absorptive capacity moderates the relationship between firm network embeddedness and firm performance. To be specific, potential absorptive capacity has moderating effect on network embeddedness influencing the knowledge acquisition, but the effect is not very significant. The interaction between joint problem solving and potential absorptive capacity has significant effect on the knowledge acquired by local companies from international flag companies, while the interactions between trust, information sharing and potential absorptive capacity do not have significant effect. Realized absorptive capacity significantly moderates the relationship between knowledge acquired by local companies from international flag companies and the firm performance.