Jiangsu Enterprise Internationalization Issues Heterogeneous Enterprise-based Perspective

With the expanding and deepening of economic globalization process, enterprises in Jiangsu Province develop quickly, especially the rapid increase of foreign trade and foreign direct investment which has become a principal force in our national economy and is playing a more and more important role. Jiangsu, as the forerunner of carrying out the strategy of "going out", find itself staying in a disadvantageous position because the Chinese Yuan continues its appreciation and most enterprises in Jiangsu are still in the low end of industrial chain. Therefore, it is crucial to think about what actions Jiangsu can take to promote internalization.On the basis of heterogeneous-firm trade theory, this paper at first enlarged the hypothesis about enterprise cost via current HYM model, that is, enterprises must pay a fixed cost in their domestically when they take foreign direct investment; second it analyzed and explained different choices for domestic sales, export and foreign direct investment made by enterprises with different levels of productivity via the method of equilibrium analysis; third it generalized the features and current problems of internalization based on the current level of internalization of Jiangsu enterprises; at last via derivation of the Solow residual method it calculated the approximate total factor productivity for the descriptive analysis of Jiangsu enterprises’ actual data and the validation and applicability of theoretical model results, and it also carried out the quantitative analysis among productivity, exports and foreign direct investment via the individual fixed effect model and binary choice model.The results indicate that Jiangsu enterprises have the self-selection effect when they plan export and foreign direct investment, that is, enterprises with low productivity only supply domestic market, enterprises with high productivity take part in exports, and enterprises with higher productivity take foreign direct investment. Moreover, the higher the productivity of Jiangsu enterprise has, the bigger its export scale can be. However, the export of enterprises cannot promote productivity. Jiangsu enterprises with higher productivity are more likely to take foreign direct investment as their larger firm size and higher management level create favorable conditions for foreign direct investment.