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Building on the network and institutional environment perspectives, this study examines the foreign market entry strategies of 851 small and medium-sized enterprises (SMEs) based in Taiwan, a newly industrialized economy. From the network perspective, our findings show that SMEs prefer to enter new markets in two distinct ways: (1) through wholly-owned subsidiaries when they are following their customers into a host country, or when the operations in a host country have more internal network linkages; and (2) through joint ventures when they have stronger supplier relationships. From the institutional environment perspective, SMEs set up wholly-owned subsidiaries when they perceive differences in the macro-economic and industrial-policy environment in a host country; however, they will choose to enter into joint ventures if they perceive a significant degree of socio-cultural difference in a host country. As SMEs decide on entry strategies, they must carefully consider not only the different types of network resource, but also the influence of institutional factors in host countries.

This study analyzes the impact of local linkages, international linkages, and absorptive capacity on firm innovation for firms based in one emerging economy while operating in another emerging economy. Testing research hypotheses derived from the institutional and organizational learning perspectives on a sample of 102 Taiwanese manufacturing firms operating in China, we find that the impact of international linkages is greater than that of local linkages, while both local and international linkages have a positive impact on innovation. Further analysis confirms that absorptive capacity has a stronger moderating effect on the relationship between local linkages and innovation than it does on the relationship between international linkages and innovation.

Numerous existing studies have explored the impact of corporate diversification on firm performance, whereas considerably less research has investigated the inter-relationships among managerial ownership, diversification, and firm performance. This paper develops several hypotheses based on the agency theory self-interest perspective and tests the relationships among managerial ownership, corporate diversification, and firm performance using a sample of 98 emerging market firms listed on the Taiwan Stock Exchange. The results show a U-shaped relationship between managerial ownership and corporate diversification, similar to that found in prior studies. However, the inflection point is 33.17%, which is lower than that found in previous studies. Moreover, in contrast to prior results, corporate diversification is found to be positively associated with short-term firm performance and bears no relationship with mid-term firm performance, while firms engaged in unrelated diversification outperform those engaged in related diversification. This paper concludes with theoretical implications and suggestions for future research.

Patenting at home country or foreign countries affects firm performance. Treating cross-regional patenting as a signal of innovation enhancement and a signal for multi-market competition, we investigate the impact of cross-regional patenting on a firm’s overall performance and performance in a specific foreign market (the US). To meet the research purposes, this research collected a wide range of primary and secondary data of 164 Taiwan’s manufacturing firms in the information and communication technology (ICT) sector. The findings suggest that if a firm has domestic and overseas patenting simultaneously (i.e., in Taiwan and the US), this cross-regional patenting can increase a firm’s overall market performance but decrease its US market performance. This result implies that though cross-regional patenting may send a signal of multi-market competition in one overseas market, it also sends another signal of greater innovation competence to global vendors, which leads to a better overall market performance. This research also enriches current multi-market competition research by introducing the competition in factor markets.

Mixed evidence has been found regarding how locating in a cluster or a park affects firms’ performance. This paper investigates how locating in different types of clusters and parks interacted by firm size or in-house R&D capability affects a firm’s innovation. Empirically testing the research hypotheses by the data of 165 Taiwan’s manufacturing firms in the information and communication technology sector and taking policy-driven parks (e.g., science parks and industrial parks) and spontaneously clusters as examples, we find that in emerging economies, firms with inferior in-house R&D capability gain more innovation benefits by locating in a science park or a spontaneous cluster while smaller firms gain more innovation benefits by locating in an industry park or a spontaneous cluster. Moreover, our findings also suggest that locating in a science park, smaller firms benefit more than larger firms in terms of innovation performance whereas larger firms benefit more than smaller firms in terms of market performance. The findings suggest that in emerging economies, compared to larger firms, smaller firms are less influenced by negative spillover effect when locating in clusters or parks.

This study examines the “intra-organisational dynamics” of the adoption of internal practices by subsidiaries of internationalised small- and medium-sized enterprises (SMEs) from the perspective of institutional theory. Based on a survey of 149 foreign subsidiaries of Taiwanese SMEs, the findings show that parent-firm executives of SMEs who are deeply involved in subsidiary operations will assess strong pressure from their home-country institution to adopt internal standard practices within a subsidiary. However, subsidiary executives of SMEs who assess heavy pressure from the host-country institution will resist this adoption. When executives of SME parent firms and subsidiaries concurrently assess high pressure but from opposing sources, creating a case of “institutional interaction” within SMEs, the subsidiary will either partially adopt a limited but sufficient level of all internal practices or only adopt internal managerial practices while forgoing internal production practices.

This study aims to link the knowledge-based view and the legitimacy perspective in order to explore the determinants of knowledge transfer and regulatory support. We then examine their consequences within a systematic framework drawing upon the institutional view. Examining a sample of 102 Taiwanese manufacturing firms operating in China, the study finds that both knowledge transfer from local suppliers and regulatory support from local governments help foreign firms to enhance their financial performance. The combination of trusting relationships with local suppliers, a foreign firm's knowledge stock, and agglomeration encourage local suppliers to transfer knowledge. Additionally, foreign firms’ knowledge stock is significantly related to regulatory support.

This study investigates the impact of foreign direct investment (FDI) and export on capital structure for firms in emerging economies. The hypotheses are developed based on an agency theory perspective and are tested using a sample of 566 Taiwanese firms. We find that the behavior of multinational corporations (MNCs) with a high debt ratio is in line with agency theory predictions. Our findings show that: (1) MNCs in emerging economies, defined as those firms with at least one foreign subsidiary or some extent of FDI, have a higher level of debt than non-MNCs, which contrasts with the findings for MNCs based in developed countries; and (2) export intensity leads to a lower debt ratio, which has not received much attention in previous studies. We propose several factors related to the context of emerging economies to explain these contradictory findings. We also explore the interaction effect of the extent of FDI and export intensity on the capital structure of MNCs, and find that the impact is negative, which implies that both monitoring costs and agency costs rise dramatically for creditors when firms’ international operations become overly complicated.

A firm can improve its innovation either by its internal research and development (RD and (2) both non-competitive and competitive R&D collaborations have a positively moderating effect on the relationship between a firm’s internal R&D efforts and firm innovation and the positive moderating effect is higher for non-competitive R&D collaborations than that of competitive R&D collaborations. These findings suggest that R&D collaborations, either non-competitive or competitive, exhibit the nature of a win–win situation. We also derive implications for firms’ selection of R&D alliance partners and government policies.

Innovative activities have become increasingly important to firms in emerging markets, particularly in China in recent years. Facing weak institutional and competitive environments in China, firms building local connections to react and to innovate can hold a better competitive position. Our study investigates how building local connections and local competition may influence a firm's innovation and compares the moderating effect of ownership (local vs. foreign firms) on firm innovation in the early 2000s. Our empirical findings suggest that, in China, local connections are conducive to firm innovations. Compared with local firms, foreign firms tend to have more innovations. However, when facing severe local competition, local firms are engaged in more innovative activities than foreign firms. We suggest the advantages of local connection owned by local companies may outperform the foreign companies. The foreign companies need to adapt their strategies to succeed in the fast changing emerging market.

This study examines how Taiwanese firms engaging in various types of international joint ventures (IJVs) have performed in China, and how different types of market-focus affect IJVs’ performance. Based on the IJV classification scheme suggested by [Makino S., & Beamish P. W. (1998). Performance and survival of joint ventures with non-conventional ownership structures. Journal of International Business Studies , 29 (4): 797–818], this study outlines and examines three categories of IJVs, according to partner nationality: Taiwan-Taiwan (T-T) JVs, Taiwan-Local (T-L) (China) JVs, and Taiwan-Foreign (T-F) (third-country) JVs. We propose two hypotheses, with associated sub-hypotheses, to examine the major effects of partner nationality on performance, as well as the moderating effects of local market-focus on the relationship between partner nationality and performance. Through the analysis of 236 Taiwanese JVs in China, we find that (1) T-L JVs perform better than T-T JVs and T-F JVs; (2) T-L JVs focusing on the local market do not perform better than those focusing on foreign markets; and (3) T-F JVs focusing on foreign markets perform better than those focusing on the local market.

PurposeThis study aims to explore subsidiaries' diversification strategies, both internationally and with regard to their product offerings. The study seeks to examine, at the subsidiary level, the relationships between subsidiary size, internationalization, production diversification, and performance.Design/methodology/approachBased on the archival data of an officially conducted survey, the study used ordered logit regression analysis to test its hypotheses using data from 920 Taiwanese subsidiaries in China.FindingsThe study's results revealed: larger subsidiaries tend to engage in internationalization and product diversification activities to a greater degree, and, as a result, tend to exhibit superior performance; and subsidiaries that pursue outward internationalization and that reinvest in related businesses enjoy enhanced performance.Research limitations/implicationsThis study examines Taiwanese firms that have one foreign subsidiary in China. Future research should examine larger firms with numerous foreign subsidiaries in developed countries, and should employ more fine‐grained measurements of subsidiary size to provide a clearer picture of subsidiary‐specific advantages.Originality/valueUnlike the existing literature, which has tended to take the perspective of the multinational corporation, this study examines internationalization and product diversification at the subsidiary level. By extending the resource‐based view to the subsidiary level, larger subsidiaries might be able to exploit their advantages so as to more successfully implement international and product diversification strategies and improve their performance in a host country.

This study attempts to reveal the pressure aspect of small- and medium-sized enterprises’ (SME) internationalization. We suggest that the decision by an SME to initiate its internationalization can be regarded as an institutional change to respond to its external pressures within the home country. We empirically test our hypotheses regarding three types of institutional isomorphic pressure (i.e., coercive, mimetic and normative pressures), as identified by CEOs of 165 Taiwanese SMEs investing in Southeast Asia and China. The results show that for those SMEs under greater institutional pressures, they are not only tending to expand abroad earlier but also adopting their initial international activities in a more radical style. The results suggest that SMEs are very sensitive to their external environments and will respond to institutional pressures from the home country by moving aggressively to internationalize.

and Key Results • This study explores the impact that formal and relational governance mechanisms have in inducing local suppliers to make transaction-specific investments in foreign and local manufacturers, respectively. • Analyses, in this regard, were based on a sample comprised of 77 local supplier/foreign manufacturer relationships and 57 local supplier/local manufacturer relationships in China. • The efficacy of different governance mechanisms, as shaped by local and foreign manufacturers, exerts varying degrees of impact on suppliers’ transaction-specific investments.

This paper reviews the impact of the Export Trading Company Acy of 1982. The ramifications of the Act are discussed and the characteristics of export trading companies are compared with those of general trading companies. The responses of medium- and small-sized firms, export management companies, and banks to the Act are analyzed. In light of the unenthusiastic responses from different parties, suggestions for further development of exporting trading companies and for government policies are proposed.

This paper examines the policies adopted by host governments to regulate the entry of multinational enterprises (MNEs). The conflict between host governments and MNEs over the choice of entry strategies is demonstrated. The theoretical underpinnings of host governments’ regulations on MNEs’ entry are provided and the restrictive policies adopted by host governments are assessed. In general, prohibiting an MNE to sign a licensing agreement with its own partially owned subsidiary generates a higher level of national welfare. If the size of the host market is large enough to support several efficient plants, encouraging MNEs to license their technologies to several local firms will also increase national welfare.

This paper constructs models to investigate the rationale for a multinational corporation to enter into a joint venture to serve a host market. In particular, the model examines the impact of profit sharing, cost reductions, risk reductions, and competition reductions on the profits of international joint ventures. The results may explain the ‘recent’ popularity of international joint ventures. The models show that (1) a joint venture is the dominant entry strategy when there is a formidable local competitor and the risks of operation are high, (2) a wholly owned subsidiary is preferred if a multinational corporation has a significant cost advantage, (3) a joint venture is preferred to a wholly owned subsidiary if significant cost reductions can be achieved through combining the strengths of a multinational corporation and a local firm, and (4) multiple licensing is preferred if the number of local firms is large.