Skip to main content

Subnational response differences on the Belt and Road Initiative policy and firm internationalization: A longitudinal and multi-level approach

Journal of International Business Policy volume 5, pages 152–171 (2022)Cite this article

Abstract

China’s “Belt and Road” Initiative (BRI) has been regarded as an important measure of all-round opening-up in the new era. However, in practice, the level of internationalization differs significantly across firms located in different Chinese provinces. Provisional policy responses to the BRI create varied conditions for internationalization, yet research thus far has overlooked these subnational differences. We pioneered quantitative measures of formal and informal provincial policy responses to the BRI and tested their impact on firm internationalization in a multi-level design with panel data. We found significant differences in provincial governments’ formal and informal responses, with both significantly impacting firm internationalization. Interestingly, the status of being listed as a key province targeted for development in the BRI does not add further positive conditions for internationalization; we explore the reasons for this in the discussion. This manuscript contributes to our understanding of subnational differences in local government policy responses to the BRI and their impact on firms’ internationalization.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Figure 1

Source: McKinsey Company. https://www.mckinsey.com/industries/capital-projects-and infrastructure/our-insights/one-belt-and-one-road-connecting-china-andthe-world).

Figure 2

Source Authors.

Figure 3
Figure 4
Figure 5

REFERENCES

  • Ai, Q., & Tan, H. 2020. Uncovering neglected success factors in post-acquisition reverse capability transfer: Evidence from Chinese multinational corporations in Europe. Journal of World Business, 55(3): 101053

    Article  Google Scholar 

  • Bannò, M., Piscitello, L., & Varum, C. 2015. Determinants of the internationalization of regions: The role and effectiveness of public policy measures. Regional Studies, 49(7): 1208–1222.

    Article  Google Scholar 

  • Bartlett, C. A., & Ghoshal, S. 1998. Beyond strategic planning to organization learning: Lifeblood of the individualized corporation. Strategy & Leadership, 26(1): 34–39.

    Article  Google Scholar 

  • Bashir, A., Salam, M., Laila, A., & Ahsan Rizvi, S. M. 2019. Socio-economic developments under ‘Belt and Road Initiative’ of China: Regional and global dimensions (Pakistan, a case in point). International Journal of Business and Economic Development (IJBED), 7(2).

  • Boisot, M., & Meyer, M. W. 2008. Which way through the open door? Reflections on the internationalization of Chinese firms. Management and Organization Review, 4(3): 349–365.

    Article  Google Scholar 

  • Brown, M. B., & Forsythe, A. B. 1974. Robust tests for the equality of variances. Journal of the American Statistical Association, 69(346): 364–367.

    Article  Google Scholar 

  • Bryk, A. S., & Raudenbush, S. W. 1992. Hierarchical linear models: Applications and data analysis methods. Thousand Oaks, CA, US: Sage Publications Inc.

    Google Scholar 

  • Buckley, P. J. 2020. China’s belt and road initiative: Changing the rules of globalization. Journal of International Business Studies, 51(2): 279–281.

    Article  Google Scholar 

  • Campbell, D. T., & Stanley, J. C. 2015. Experimental and quasi-experimental designs for research. Boston: Ravenio Books.

    Google Scholar 

  • Chan, C. M., Makino, S., & Isobe, T. 2010. Does subnational region matter? Foreign affiliate performance in the United States and China. Strategic Management Journal, 31(11): 1226–1243.

    Article  Google Scholar 

  • Chen, S., Gu, J., & He, Z. 2020. Research on the relationship between the policy strength of “the Belt and Road” related documents and the provincial economic openness: An empirical analysis of 18 provinces along “the Belt and Road”. Journal of Chongqing University (Social Science Edition).

  • China. 2015. Vision and Actions on Jointly Building Silk Road Economic Belt and 21st‐Century Maritime Silk Road (V&A, 推动共建丝绸之路经济带和21世纪海上丝绸之路的愿景与行动). State Council of China [online]. Available from: http://www.mofcom.gov.cn/article/i/dxfw/jlyd/201601/20160101243342.shtml[accessed 24 December 2018]

  • Cuervo-Cazurra, A., Luo, Y., Ramamurti, R., & Ang, S. H. 2018. The impact of the home country on internationalization. Journal of World Business, 53(5): 593–604.

    Article  Google Scholar 

  • Dansereau, F., Yammarino, F. J., & Kohles, J. C. 1999. Multiple levels of analysis from a longitudinal perspective: Some implications for theory building. Academy of Management Review, 24(2): 346–357.

    Article  Google Scholar 

  • Deng, T., Hu, Y., & Yang, Y. 2019. How geographic, cultural, and institutional distances shape location choices of China’s OFDI in tourism? – An empirical study on B&R countries. Asia Pacific Journal of Tourism Research, 24(8): 735–749.

    Article  Google Scholar 

  • DiMaggio, P. J., & Powell, W. W. 1983. The Iron Cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2): 147–160.

    Article  Google Scholar 

  • Fallon, T. 2015. The New Silk Road: Xi Jinping’s grand strategy for Eurasia. American Foreign Policy Interests, 37(3): 140–147.

    Article  Google Scholar 

  • Fang, A.-H. 2017. Interactive research on the “One Belt One Road” and FTA strategy. Reformation & Strategy, 7: 75–78.

    Google Scholar 

  • Fei, D. 2017. Worlding developmentalism: China’s economic zones within and beyond its border. Journal of International Development, 29(6): 825–850.

    Article  Google Scholar 

  • Galán, E. M., & Leandro, F. J. 2019. The Belt and Road Initiative: The cornerstone of the new-fangled financial institutionalism led by China. TalTech Journal of European Studies, 9(2): 153–182.

    Google Scholar 

  • Gao, Y. 2017. Influences of institutional differences on Chinese enterprises’ investment on countries in “The Belt and Road” strategy—Based on regulatory effects of ethnic Chinese in host countries. Modern Economy, 8(4): 551–566.

    Article  Google Scholar 

  • Genin, A. L., Tan, J., & Song, J. 2020. State governance and technological innovation in emerging economies: State-owned enterprise restructuration and institutional logic dissonance in China’s high-speed train sector. Journal of International Business Studies. https://doi.org/10.1057/s41267-020-00342-w.

    Article  Google Scholar 

  • Gomez-Mejia, L. R., Makri, M., & Kintana, M. L. 2010. Diversification decisions in family-controlled firms. Journal of Management Studies, 47(2): 223–252.

    Article  Google Scholar 

  • Gong, Y., Chow, I. H.-S., & Ahlstrom, D. 2011. Cultural diversity in China: Dialect, job embeddedness, and turnover. Asia Pacific Journal of Management, 28(2): 221–238.

    Article  Google Scholar 

  • Haiyue, L., & Manzoor, A. 2020. The impact of OFDI on the performance of Chinese firms along the ‘Belt and Road’. Applied Economics, 52(11): 1219–1239.

    Article  Google Scholar 

  • Hu, H., Wang, S., & He, J.-L. 2020. Comparative advantages of free trade port construction in shanghai under the belt and road initiative. International Journal of Financial Studies, 8(1).

  • Huang, K., & Zhao, P. 2018. Policy textual and quantitative research on “the Belt and Road Initiatives”—from the perspective of policy instruments. Journal of Intelligence, 1.

  • Huang, Y. 2016. Understanding China’s Belt & Road Initiative: Motivation, framework and assessment. China Economic Review, 40: 314–321.

    Article  Google Scholar 

  • Huang, Z. 2014. Research on policy development of transformation of local scientific and technological achievements in China—A quantitative analysis based on 239 policy texts. Science & Technology Progress and Policy, 13: 103–108.

    Google Scholar 

  • Imomnazar, I. 2018. Impact of “One Belt, One Road” initiatives to the economy of Central Asian countries. International Journal of Business and Economic Development (IJBED), 6(2).

  • Khanna, T., & Palepu, K. 1997. Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75: 41–54.

    Google Scholar 

  • Li, J., Liu, B., & Qian, G. 2019. The Belt and Road Initiative, cultural friction and ethnicity: Their effects on the export performance of SMEs in China. Journal of World Business, 54(4): 350–359.

    Article  Google Scholar 

  • Li, J., Xia, J., Shapiro, D., & Lin, Z. 2018. Institutional compatibility and the internationalization of Chinese SOEs: The moderating role of home subnational institutions. Journal of World Business, 53(5): 641–652.

    Article  Google Scholar 

  • Li, X., & Zeng, K. 2019. To join or not to join? State ownership, commercial interests, and China’s belt and road initiative. Pacific Affairs, 92(1): 5–26.

    Article  Google Scholar 

  • Liang, H., Ren, B., & Sun, S. L. 2015. An anatomy of state control in the globalization of state-owned enterprises. Journal of International Business Studies, 46(2): 223–240.

    Article  Google Scholar 

  • Lin, N. 2011. Capitalism in China: A centrally managed capitalism (CMC) and its future. Management and Organization Review, 7(1): 63–96.

    Article  Google Scholar 

  • Liu, W. 2018. China’s belt and road initiatives: Economic geography reformation. New York: Springer.

    Book  Google Scholar 

  • Liu, Q., & Liang, F. 2019. Analysis of “policy response difference” of local governments based on attention competition theory—The case study of medical insurance payments reform. Journal of Gansu Institute of Public Administration, 3: 39–49.

    Google Scholar 

  • Liu, R., & Gao, F. 2016. The location path selection of “One Belt And One Road” strategy and the elimination of overcapacity in traditional industries. Social Science Research, 1: 45–56.

    Google Scholar 

  • Lu, J. W., & Beamish, P. W. 2001. The internationalization and performance of SMEs. Strategic Management Journal, 22(6–7): 565–586.

    Article  Google Scholar 

  • Lu, W., & Li, D.-W. 2016. Differential development strategies for the rise of the great power against the background of “One Belt and One Road”. China Soft Science, 10: 11–19.

    Google Scholar 

  • Luo, Y., & Tung, R. L. 2007. International expansion of emerging market enterprises: A springboard perspective. New York: Springer.

    Google Scholar 

  • Luo, Y., & Tung, R. L. 2018. A general theory of springboard MNEs. Journal of International Business Studies, 49(2): 129–152.

    Article  Google Scholar 

  • Luo, Y., Xue, Q., & Han, B. 2010. How emerging market governments promote outward FDI: Experience from China. Journal of World Business, 45(1): 68–79.

    Article  Google Scholar 

  • Ma, X., Ding, Z., & Yuan, L. 2016. Subnational institutions, political capital, and the internationalization of entrepreneurial firms in emerging economies. Journal of World Business, 51(5): 843–854.

    Article  Google Scholar 

  • Ma, X., Tong, T. W., & Fitza, M. 2013. How much does subnational region matter to foreign subsidiary performance? Evidence from “Fortune” Global 500 Corporations’ investment in China. Journal of International Business Studies, 44(1): 66–87.

    Article  Google Scholar 

  • Marano, V., Arregle, J.-L., Hitt, M. A., Spadafora, E., & Van Essen, M. 2016. Home country institutions and the internationalization-performance relationship: A meta-analytic review. Journal of Management, 42(5): 1075–1110.

    Article  Google Scholar 

  • Marshall, V. B., Brouthers, L. E., & Keig, D. L. 2020. RIMS: A new approach to measuring firm internationalization. Journal of International Business Studies, 51: 1133–1141.

    Article  Google Scholar 

  • Meyer, K. E., Estrin, S., Bhaumik, S. K., & Peng, M. W. 2009. Institutions, resources, and entry strategies in emerging economies. Strategic Management Journal, 30(1): 61–80.

    Article  Google Scholar 

  • Noordwijk, M. V. 2020. Sustainable palm oil: Dissecting a global debate. Paper presented at IOP Conference Series: Earth and Environmental Science.

  • North, D. C. 1990. Institutions, institutional change and economic performance. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • North, D. C. 2005. Understanding the process of economic change. New Delhi: Academic Foundation.

    Book  Google Scholar 

  • Ohashi, H. 2018. The Belt and Road Initiative (BRI) in the context of China’s opening-up policy. Journal of Contemporary East Asia Studies, 7(2): 85–103.

    Article  Google Scholar 

  • Oi, J. C. 1995. The role of the local state in China’s transitional economy. The China Quarterly, 144: 1132–1149.

    Article  Google Scholar 

  • Peng, M. W., Sun, S. L., Pinkham, B., & Chen, H. 2009. The institution-based view as a third leg for a strategy tripod. Academy of Management Perspectives, 23(3): 63–81.

    Article  Google Scholar 

  • Peng, M. W., Wang, D. Y. L., & Jiang, Y. 2008. An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39(5): 920–936.

    Article  Google Scholar 

  • Podsakoff, P. M., MacKenzie, S. B., & Podsakoff, N. P. 2012. Sources of method bias in social science research and recommendations on how to control it. Annual Review of Psychology, 63: 539–569.

    Article  Google Scholar 

  • Porter, M. E. 1998. Clusters and the new economics of competition. Harvard Business Review, November-December.

  • Rabe-Hesketh, S., & Skrondal, A. 2008. Multilevel and longitudinal modeling using Stata (2nd edn). College Station: Stata Press.

    Google Scholar 

  • Ramamurti, R., & Hillemann, J. 2018. What is “Chinese” about Chinese multinationals? Journal of International Business Studies, 49(1): 34–48.

    Article  Google Scholar 

  • Sanders, G. J. 2017. The Asian Infrastructure Investment Bank and the Belt and Road Initiative: Complementarities and contrasts. Chinese Journal of International Law, 16(2): 367–371.

    Article  Google Scholar 

  • Scott, W. R. 1995. Institutions and organizations. New York: SAGE Publications.

    Google Scholar 

  • Shahriar, S., Qian, L., Saqib Irshad, M., Kea, S., Muhammad Abdullahi, N., & Sarkar, A. 2018. Institutions of the Belt & Road Initiative: A systematic literature review. Journal of Law, Policy and Globalization, 77: 1.

    Google Scholar 

  • Shapira, Z. 1995. Risk taking. Manhattan: Russell Sage Foundation.

    Google Scholar 

  • Shook, C. L., Ketchen, D. J., Cycyota, C. S., & Crockett, D. 2003. Data analytic trends and training in strategic management. Strategic Management Journal, 24(12): 1231–1237.

    Article  Google Scholar 

  • Sullivan, D. 1994. Measuring the degree of internationalization of a firm. Journal of International Business Studies, 25(2): 325–342.

    Article  Google Scholar 

  • Summers, T. 2021. The belt and road initiative in Southwest China: Responses from Yunnan province. The Pacific Review, 34(2): 206–229.

    Article  Google Scholar 

  • Sun, S. L., Peng, M. W., Lee, R. P., & Tan, W. 2015. Institutional open access at home and outward internationalization. Journal of World Business, 50(1): 234–246.

    Article  Google Scholar 

  • Sutherland, D., Anderson, J., Bailey, N., & Alon, I. 2020. Policy, institutional fragility, and Chinese outward foreign direct investment: An empirical examination of the Belt and Road Initiative. Journal of International Business Policy, 3(3): 249–272.

    Article  Google Scholar 

  • Tan, Y. 2020. Disaggregating “China, Inc.”: The hierarchical politics of WTO entry. Comparative Political Studies, 53(13): 2118–2152.

    Article  Google Scholar 

  • Torres de Oliveira, R., & Figueira, S. 2019. How China’s business system works. The savvy investor’s guide for doing business in China: 159–185. Spokane: Marquette Books LLC.

  • Torres de Oliveira, R., & Rottig, D. 2018a. Chinese acquisitions of developed market firms: Home semi-formal institutions and a supportive partnering approach. Journal of Business Research, 93: 230–241.

    Article  Google Scholar 

  • Torres de Oliveira, R., & Rottig, D. 2018b. Managing emerging market acquisitions in Europe: Integrating the acquisition of the German Preh GmbH by the Chinese Joyson Group. In G. Suder & J. Lindeque (Eds), Doing business in Europe (3rd edition). London: SAGE Publications Ltd.

    Google Scholar 

  • Torres de Oliveira, R., Sahasranamam, S., Figueira, S., & Paul, J. 2020. Upgrading without formal integration in M&A: The role of social integration. Global Strategy Journal, 10: 619–652. https://doi.org/10.1002/gsj.1358.

    Article  Google Scholar 

  • Urdinez, F. 2020. The accession of Latin American countries to the Asian Infrastructure Investment Bank: lessons from Brazil and Chile. Asian Education and Development Studies, ahead-of-print.

  • Voss, H., Buckley, P. J., & Cross, A. R. 2010. The impact of home country institutional effects on the internationalization strategy of Chinese firms. Multinational Business Review, 18(3): 25–48.

    Article  Google Scholar 

  • Wan, W. P., & Hoskisson, R. E. 2003. Home country environments, corporate diversification strategies, and firm performance. Academy of Management Journal, 46(1): 27–45.

    Google Scholar 

  • Wang, C., Hong, J., Kafouros, M., & Wright, M. 2012. Exploring the role of government involvement in outward FDI from emerging economies. Journal of International Business Studies, 43(7): 655–676.

    Article  Google Scholar 

  • Wang, C., Lim, M. K., Zhang, X., Zhao, L., & Lee, P. T.-W. 2020a. Railway and road infrastructure in the Belt and Road Initiative countries: Estimating the impact of transport infrastructure on economic growth. Transportation Research Part A: Policy and Practice, 134: 288–307.

    Google Scholar 

  • Wang, L., Yan, H., Yang, X., Ciabuschi, F., & Wei, W. X. 2020b. Assets of origin? Chinese multinational enterprises amidst the Belt and Road Initiative. Thunderbird International Business Review, 62(3): 233–238.

    Article  Google Scholar 

  • Wu, R. 2017. Research on the free trade area on China under the strategic background of “One Belt and One Road”. Prices Monthly, 8: 64–66.

    Google Scholar 

  • Xing, Y., Liu, Y., & Lattemann, C. 2020. Institutional logics and social enterprises: Entry mode choices of foreign hospitals in China. Journal of World Business, 55(5),

    Article  Google Scholar 

  • Xiong, A., Pu, Y., & Zhang, Y. 2015. “One Belt And One Road” and excess capacity transfer. Seeker, 12: 75–79.

    Google Scholar 

  • Xu, C. 2011. The fundamental institutions of China’s reforms and development. Journal of Economic Literature, 49(4): 1076–1151.

    Article  Google Scholar 

  • Yamakawa, Y., Peng, M. W., & Deeds, D. L. 2008. What drives new ventures to internationalize from emerging to developed economies? Entrepreneurship Theory and Practice, 32(1): 59–82.

    Article  Google Scholar 

  • Yan, B., Cheng, Q., Jia, Z., Yang, Z., & Wu, L. 2019. How does local governments respond to the requirements for promoting the scientific and technological innovation cooperation under the Belt and Road Initiative?—A comparative case study. Management Review, 31(02): 278–290.

    Google Scholar 

  • Yang, G., Huang, X., Huang, J., & Chen, H. 2020. Assessment of the effects of infrastructure investment under the belt and road initiative. China Economic Review, 60.

    Article  Google Scholar 

  • Yang, J. 2018. Subnational institutions and location choice of emerging market firms. Journal of International Management, 24(4): 317–332.

    Article  Google Scholar 

  • Yue, G.L., & Mao, S.Z. 2011. Regional differences in entrepreneurship and growth of regional private economy: Based on the comparison of private enterprises in Shandong and Zhejiang. Journal of Business Economics, 7.

  • Zeng, J. 2019. Narrating China’s belt and road initiative. Global Policy, 10(2): 207–216.

    Article  Google Scholar 

  • Zeng, Q. 2015. Quantitative analysis of triangular regional cooperation policy text: 2004–2014. Chinese Administration, 7: 110–116.

    Google Scholar 

  • Zhai, K. 2015. Strategic thinking of “One Belt And One Road” construction. International Observation, 3: 86–111.

    Google Scholar 

  • Zhan, J. V., & Qin, S. 2017. The art of political ambiguity: Top–down intergovernmental information asymmetry in China. Journal of Chinese Governance, 2(2): 149–168.

    Article  Google Scholar 

  • Zhang, L., Luo, M., Yang, D., & Li, K. 2018. Impacts of trade liberalization on Chinese economy with Belt and Road initiative. Maritime Policy and Management, 45(3): 301–318.

    Article  Google Scholar 

Download references

ACKNOWLEDGEMENTS

The authors greatly appreciate the sponsorship provided to this study by Ministry of Science and Technology, Executive Yuan, Taiwan, R.O.C., under Grant Number: MOST109-2410-H-214-005-MY3, 2020/08-2023/07.

Author information

Authors and Affiliations

  1. Business School, Australia Centre for Entrepreneurship, Queensland University of Technology, Brisbane, Australia

    Artemis Chang & Rui Torres de Oliveira

  2. Department of Business Administration, I-Shou University, Kaohsiung, Taiwan

    Hsi-Mei Chung

  3. College of Economics and Management, Xi’an University of Posts and Telecommunications, Xi’an, China

    Nan Zheng

  4. Business School, Queensland University of Technology, Brisbane, Australia

    Nan Zheng

Authors
  1. Artemis Chang
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rui Torres de Oliveira
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Hsi-Mei Chung
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Nan Zheng
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rui Torres de Oliveira.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Accepted by Xiaolan Fu, Guest Editor, 22 June 2021. This article has been with the authors for four revisions.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Chang, A., Torres de Oliveira, R., Chung, HM. et al. Subnational response differences on the Belt and Road Initiative policy and firm internationalization: A longitudinal and multi-level approach. J Int Bus Policy 5, 152–171 (2022). https://doi.org/10.1057/s42214-021-00118-5

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s42214-021-00118-5

Keywords

  • Belt and Road Initiative
  • China
  • subnational differences
  • provincial policy response
  • internationalization
  • interprovincial differences