New research from York University’s Schulich School of Business shows that multinational enterprises (MNEs) face three key challenges when doing business in China: organizational legitimacy, the protection of property rights and adjusting to national industrial policies.
The research findings are contained in the paper titled “Evolution of MNE Strategies amid China’s changing institutions – a thematic review,” published in the Journal of International Business Studies. The paper is co-authored by Yigang Pan, a professor of marketing and international business at Schulich, together with Caleb H. Tse from Nanyang Business School in Singapore, Klaus E. Meyer from Ivey Business School in London, Ont., and Tailan Chi from the University of Wisconsin-Milwaukee.
The study reviewed 331 papers on MNE strategies and operations in China published in top international business and management journals between 2001 and 2022. The researchers looked at the opportunities and challenges that China’s distinct state-led capitalism created for MNEs in China. The researchers focused on six aspects of MNE strategies and operations: market entry, strategic alliances, innovation and knowledge sharing, global value chain strategies, guanxi (a Chinese term referring to the system of social networks and influential relationships that facilitate business dealings) and relationship management, and non-market strategies.
“As China’s economy rose to become the second largest in the world, its institutions did not converge with those of other advanced economies as predicted by many western observers,” says Pan. “As a result, how multinational enterprises engage with China’s changing institutional context needed to be revisited, and this study shows how MNEs are adapting, as well as the key challenges they face.”
Pan says the paper’s findings open the door to further research on other issues, including how MNEs are navigating the growing geopolitical tensions between China and the U.S. and the rise of deglobalization and protectionism.