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International expansion and home-country resource acquisition: A signaling perspective of emerging-market firms’ internationalization

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Abstract

Despite growing attention to the role of home countries in studies of emerging-market multinational enterprises (EMNEs), there is limited focus on how international expansion affects EMNEs’ home conditions. Drawing on signaling theory, we propose that EMNEs’ international expansions serve as a signaling mechanism that shapes perceptions of stakeholders in their home countries and thus facilitate their resource acquisition from these stakeholders. The signaling effect is strengthened when EMNEs enter more advanced host countries where higher entry barriers incur higher signaling costs that serve as isolating mechanisms; and when they are located in less developed home markets where information asymmetry is more serious due to weaker institutional arrangements. Furthermore, congruent signals, such as patents, strengthen the main effect by cross-confirming the signaled content, while incongruent signals, such as political connections, weaken it due to ambiguity in interpreting the original signal. Using instrumental variables and a difference-in-differences design to account for potential endogeneity of international expansion, our empirical analysis of Chinese-listed privately owned enterprises from 1999 to 2019 supports our propositions.

Résumé

Malgré l'attention croissante portée au rôle des pays d'origine dans les recherches sur les entreprises multinationales des marchés émergents (Emerging-Market Multinational Enterprises - EMNEs), les chercheurs se focalisent peu sur la manière dont l'expansion internationale influence les conditions des pays d’origine des EMNEs. Nous appuyant sur la théorie de la signalisation, nous proposons que les expansions internationales des EMNEs servent de mécanisme de signalisation qui façonne les perceptions des parties prenantes dans leurs pays d'origine, et facilitent ainsi l'acquisition de ressources auprès de ces dernières. L'impact de signalisation est renforcé lorsque les EMNEs entrent dans des pays d'accueil plus avancés où les barrières à l'entrée plus élevées entraînent des coûts de signalisation plus importants qui servent de mécanismes d'isolement ; et lorsqu'elles sont implantées sur des marchés d'origine moins développés où l'asymétrie d'information est plus sérieuse en raison des arrangements institutionnels plus faibles. De plus, les signaux congruents, tels que les brevets, renforcent l'effet principal par une confirmation croisée du contenu du signal, tandis que les signaux incongruents, tels que les relations politiques, l'affaiblissent en raison de l'ambiguïté de l'interprétation du signal original. En utilisant des variables instrumentales et un modèle de différences dans les différences pour tenir compte de l'endogénéité potentielle de l'expansion internationale, notre analyse empirique sur des entreprises privées chinoises cotées en bourse sur la période 1999 - 2019 confirme nos propositions.

Resumen

Pose de la creciente atención del país de origen en los estudios de empresas multinacionales de mercados emergentes (EMNEs por sus iniciales en inglés), hay un enfoque limitado a cómo la expansión internacional afecta las condiciones en el país de origen de las empresas multinacionales de mercados emergentes. Basándonos en la teoría de señalización, proponemos que la expansión internacional de las empresas multinacionales de mercados emergentes sirve como un mecanismo de señalización que moldea las percepciones de los grupos de interés en sus países de origen y con eso facilitan su adquisición de recursos con dichos grupos de interés. El efecto de señalamiento es fortalecido cuando las empresas multinacionales de mercados emergentes entran a países anfitriones más avanzados, en donde las barreras de entrada más altas suponen mayores costos de señalización que sirven como mecanismos de aislamiento, y cuando se ubican en mercados de origen menos desarrollados, en donde la asimetría de información es más seria debido a unos acuerdos institucionales más débiles. Adicionalmente, las señales congruentes, como las patentes, refuerzan el efecto principal mediante la confirmación cruzada del contenido señalado, mientras que las señales incongruentes, como las conexiones políticas, lo debilitan debido a la ambigüedad en la interpretación de la señal original. Utilizando variables instrumentales y un diseño de diferencias en diferencias para tener en cuenta la endogeneidad potencial de la expansión internacional, nuestro análisis empírico de las empresas chinas de propiedad privada que cotizan en bolsa desde 1999 hasta 2019 apoya nuestras proposiciones.

Resumo

Não obstante a crescente atenção ao papel dos países de origem em estudos de empresas multinacionais de mercados emergentes (EMNEs), há um foco limitado em como a expansão internacional afeta as condições domésticas de EMNEs. Com base na teoria da sinalização, propomos que expansões internacionais de EMNEs sirvam como um mecanismo de sinalização que molda percepções de stakeholders em seus países de origem e, assim, facilita a aquisição de recursos destes stakeholders. O efeito de sinalização é fortalecido quando EMNEs ingressam em países anfitriões mais avançados, onde barreiras de entrada mais altas incorrem em custos de sinalização mais altos que servem como mecanismos de isolamento; e quando estão localizados em mercados domésticos menos desenvolvidos, onde a assimetria de informação é mais elevada devido a arranjos institucionais mais fracos. Além disso, sinais congruentes, como patentes, fortalecem o efeito principal pela confirmação cruzada do conteúdo sinalizado, enquanto sinais incongruentes, como conexões políticas, o enfraquecem devido à ambiguidade na interpretação do sinal original. Usando variáveis instrumentais e um design de diferenças em diferenças para explicar uma possível endogeneidade da expansão internacional, nossa análise empírica de empresas privadas chinesas listadas de 1999 a 2019 corrobora nossas proposições.

摘要

尽管越来越多的学者重视母国在新兴市场跨国企业 (EMNEs) 研究中的作用, 但对国际扩张如何影响 EMNEs的母国处境仍关注有限。基于信号理论,我们提出 EMNEs 的国际扩张作为一种信号机制, 能够塑造其母国利益相关者的看法, 从而促进企业从这些利益相关者那里的资源获取。当 EMNEs 进入更发达的东道国时, 信号效应得到加强。 因为在这些国家, 更高的进入壁垒导致更高的作为隔离机制的信号成本。当EMNEs位于欠发达的母国市场时, 由于制度安排较弱, 信息不对称更为严重, 信号效应也得到加强。此外, 一致的信号(例如专利)通过交叉确认信号内容增强了主效应, 而不一致的信号(例如政治关系)由于带来对原始信号解释的含糊性则削弱了主效应。我们使用工具变量和双重差分设计来处理国际扩张潜在的内生性, 我们对 1999 至 2019 年间中国上市民营企业的实证分析支持了我们的命题。

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ACKNOWLEDGEMENTS

We thank editor Professor Klaus Meyer, Professor Rosalie Tung, Professor Sjoerd Beugelsdijk, and three anonymous reviewers for their insightful feedback. We also appreciate helpful comments on earlier versions of this paper from Dan Li, Stephanie Wang, and Cathy Liu. The first author is grateful for funding support from the National Natural Science Foundation of China (Grant No. 72002215) and the second author appreciates support provided by the Samuel and Pauline Glaubinger Professorship.

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Du, J., Zhao, E.Y. International expansion and home-country resource acquisition: A signaling perspective of emerging-market firms’ internationalization. J Int Bus Stud 54, 1642–1660 (2023). https://doi.org/10.1057/s41267-023-00624-z

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