To wait or not to wait: pacing international expansion in China for best results

Abstract

Purpose

How to enter and expand in a newly emerged foreign market is less understood. Should multinational enterprises move fast or slowly? In this study, the authors take China as the context to investigate what factors will lead to a fast expansion strategy in a foreign market. The purpose of this paper is to understand whether fast expansion benefits firms’ performance in a rapidly emerging market.

Design/methodology/approach

Based on insights from field interviews, the authors developed a theoretical framework. Then, the authors collected data from surveys of managers of multinational enterprises from Western countries to test their hypothesis. This research context is based on the experience of multinational enterprises in China which opened up to foreign direct investment in 1979.

Findings

This study shows that internally, strategic long-term investment goals, top management team commitment and externally switching costs and the growth in the demand market which will push firms to expand fast in the newly emerged China market. Faster pace of expansion benefits the performance of multinational enterprises in a newly emerged market.

Originality/value

Based on the onsite interviews followed by the survey of top managers of multinational enterprises located in China, this study provides a fine-grained analysis of the importance of pace and its key antecedents. Thus, the results provide new insights to decision-makers of multinational enterprises when considering expanding in an emerging market at its early stages of growth.

Citation

Jiang, R.J., Xiong, J., Ding, Y. and Parameswaran, R. (2021), "To wait or not to wait: pacing international expansion in China for best results", Journal of Business Strategy, Vol. 42 No. 5, pp. 343-350. https://doi.org/10.1108/JBS-01-2020-0004