Transformations  in
Business & Economics

Internationalization and Performance of Firms: Evidence from China
S.X. Zeng, X.M. Xie, C.M. Tam, T.W. Wan

ABSTRACT. This paper aims to explore the corresponding correlation between the internationalization and performance of firms using an empirical study of the manufacturing enterprises in China. First, based upon the concepts derived from literature reviews, three hypotheses have been developed that relate the exporting activity, the mode of foreign direct investment (FDI) and the relative use of the entry modes to the performance of firms ROA, confined to those which have internationalized their manufacturing activities. Then, using a sample of 569 Chinese manufacturing enterprises to test these hypotheses, evidence consistent with previous studies has been found that there is a significant corresponding correlation between the export intensity and the performance of a firm. It is also found that the difference in influences of different FDI modes on the performance of firms is found not significant. Finally, it is found that for each entry mode, return on assets (ROA) of firms has all partially improved, but there is no significant difference in the influence of international modes on the performance of firms.

KEYWORDS: internationalization, performance, manufacturing, foreign direct investment, entry mode, China.

JEL classification: F23.