Subnational differences and entry mode performance: Multinationals in east and west China

Abstract

We compare the influence of entry mode choice on subsidiary performance in two developmentally-differentiated regions of a developing host country. Analysis of 113 subsidiaries located in two provinces of China indicates that wholly owned subsidiaries outperform joint ventures in the developed region, whereas joint ventures outperform wholly owned subsidiaries in the less developed region. However, the smaller performance gap between wholly owned subsidiaries and joint ventures in the developed region indicates that the magnitude of influence of entry mode choices on performance varies across subnational regions. Firms must therefore be more discriminating in formulating entry strategies to regionally heterogeneous countries.

Full paper available at doi:10.1017/jmo.2017.59

Keywords: Chinese context, entry mode selection, financial performance, subnational heterogeneity