Conclusions

The aim of this thesis was to study the role of knowledge in internationalization processes of Chinese firms. Both quantitative and qualitative methods were used, as well as comparative studies and longitudinal analysis. Based on five original studies, the sub-research questions conclusions can be summarized as follows (Table 14).

Table 14. Major conclusions of this thesis

Sub-research Questions Major Conclusions What is the knowledge level

of Chinese BGs and NBGs?

How does the knowledge level affect their internationalization speed and foreign market selection?

Based on Studies I, II and V:

both Chinese BGs and NBGs initially internationalize successfully, despite lacking knowledge.

Low knowledge levels do not affect their

internationalization speed, but firms all use exporting as their foreign operation mode. Both BGs and NBGs select culturally and geographically more distant countries that have a higher population and more advanced economic development.

What channels are used by Chinese BGs and NBGs to acquire foreign market knowledge?

Based on Studies I, II, III, IV and V:

during the early stages of internationalization, neither BGs nor NBGs use the channels mentioned in the existing literature to acquire knowledge, except for attending government-organized fairs and exhibitions.

During the later stages, Chinese firms acquire foreign market knowledge in various ways.

Sub-research Questions Major Conclusions What are the connections

between Chinese firms’

knowledge level and their internationalization success?

Based on Studies IV and V:

during the initial stages of internationalization, Chinese firms internationalize successfully despite lacking knowledge. After entering their first three foreign markets, firms start to gain knowledge, which affects their foreign expansion strategy going forward.

Are the internationalization processes of Chinese firms smooth, or do they encompass changes? (exit and reentry)

Based on Studies IV and V:

Chinese firms’ internationalization processes involve changes. During periods of radical change and crisis, knowledge level determines decisions relating to the firms’ foreign market exit, and the success of reentry.

What are the expansion strategies and foreign market knowledge levels of Chinese BGs and NBGs?

Based on Studies I, III, IV and V:

both BGs and NBGs follow a common expansion path – USA-Germany-UK/Canada/Australia – during their early stages of internationalization, despite lacking knowledge of these foreign markets. Chinese firms are often chosen by foreign buyers in the beginning;

however, they later select their foreign markets.

Knowledge is important for Chinese firms regarding decisions of foreign market exit and reentry.

Source: compiled by the author

In addition, the following conclusions can be drawn.

1) Compared to BGs in Western literature, Chinese BG firms have similar distinctive features to those summarized by previous scholars (Oviatt and McDougall 1994; Gulati 1999; Mascherpa and Zucchella 2011). Chinese BGs are highly active in international markets from or close to founding (Bell 1995; Madsen and Servais 1997); they are characterized by limited financial and tangible resources, and their managers have a strong inter-national outlook and interinter-national entrepreneurial orientation (Cavusgil and Knight 2009). Chinese BGs often emphasize differentiation strategy and superior product quality (Coviello and Munro 1995). They use advanced communication and information technologies and typically use external, independent intermediaries for distribution in foreign markets (Oviatt and McDougall 1994).

2) Compared with existing internationalization models, knowledge plays a different role within Chinese firms’ internationalization processes (see Figure 7). Both faster internationalizers, including BGs, and slower inter-nationalizers initially began successful foreign operations despite a lack of knowledge. The main factors that cause their success are governmental support, huge global demand, and owners’ entrepreneurial mindset. Chinese BGs and NBGs are inactive in terms of knowledge acquisition, and faster internationalizers even less so. During the early stages, Chinese firms are

very often selected and contacted by foreign firms, as opposed to initially going abroad themselves. However, knowledge plays a more important role in firms’ further expansions after the first three foreign markets. Firms start to gain knowledge from their foreign partners, and also through other channels such as international fairs and exhibitions, establishing sales and representative offices, hiring local and foreign expertise, and so on.

Especially during periods of radical changes, firms gain knowledge for their foreign market exit and reentry, and the level of knowledge also determines their reentry success.

Figure 7. The roles of knowledge in Chinese firms’ longitudinal internationalization processes

I, II, III, IV, V refers to the study number Source: compiled by the author

3) Both Chinese BGs and NBGs initially enter geographically and culturally more distant countries, and then enter some Asian countries. For NBGs, their internationalization paths are very different from those identified within the Uppsala model. Both BGs and NBGs follow a common expan-sion path: USA-Germany-UK/Canada/Australia. The main drivers of such market strategies are governmental promotions, entrepreneurial mindset of entering highly populated and economically developed countries, and the draw of large Chinese communities in these foreign countries.

4) Comparative studies show that: BGs have more target countries than NBGs;

BGs expand to more distant target countries than NBGs; and the number of target countries is positively related to the export share from total sales and export age, though it is not positively related to the firm’s international commitment.

Hence, characterized by the early founding year, which goes back to the 1990s, and low- and medium-tech sectors, Chinese firms have a different type of internationalization process from that shown in existing internationalization models. Knowledge plays very different roles during the longitudinal process of Chinese firms’ internationalization (see Figure 3). Both Chinese BGs and NBGs initially internationalize successfully, despite lacking knowledge. Both types of firms first enter culturally and geographically more distant countries, and they follow a very similar foreign expansion path. Their foreign market selections are driven mainly by the foreign markets’ economic development phase, the scale of the population, and governmental support. The importance of the role of knowledge increases throughout their longitudinal internationalization processes. Knowledge is not a key factor influencing internationalization speed in the initial stages; however, firms gain knowledge from the early inter-nationalization period, and start to make decisions to enter new markets based on their knowledge and capabilities. Knowledge plays a key role during foreign market exit and reentry.

To summarize, the above findings of this thesis make a comprehensive contribution to the internationalization process and IB literature, and provide a new understanding of firms’ internationalization processes and behaviors, especially in the context of emerging markets such as China.

4.4. Limitations, Implications and