نقش شبکه سازی و تعهد در فرایند ورود به بازار خارجی: شرکت های چند ملیتی در صنعت خودرو چین

This study addresses the role of business networking and commitment to local market when MNCs enter an emerging market. We investigate the reasons for variations in the speed of MNCs’ foreign market entry. Particularly, we examine whether MNCs’ networking with the key local actors facilitates MNCs’ entry and whether learning and commitment in the context of networking affects the speed of MNCs’ entry process in the Chinese automobile market. The study is based on the experiences of three MNCs, a U.S.-based firm, a European firm, and a Korean firm. Data is collected through in-depth interviews and through secondary sources related to the entry process of these cases. The cases illustrate that speed of foreign market entry is significantly influenced by business networking between MNCs and the key business and socio-political actors, since different types of business networking determine the level of learning and commitment. Our cases also show that the effects of business networking generated during the initial foreign market entry by the MNC may be different than those during sequential entries.

In the international business (IB) literature, much research has focused on networking in developed economies during the process of foreign market entry (Elg et al., 2008, Giroud and Scott-Kennel, 2009 and Kontinen and Ojala, in press). In recent years, there has been a growing interest among researchers about the impact of networking in emerging markets (Luo and Tung, 2007 and Santos and Ruffin, 2010). Emerging markets are believed to posses environmental characteristics different from those in advanced economies. For example, the market institutions are not well developed and the business–government relationship is often excessively inter-twined (Khanna et al., 2005 and Khanna and Palepu, 1997). It is also considered that multinationals from emerging markets are better equipped to handle the networking and entry processes in other emerging markets (Khanna & Palepu, 1997). Business networking is defined as the formation of inter-firm relationships with key business actors (Anderson, Håkansson, & Johanson, 1994). Since the internationalisation process model was first introduced by Johanson and Vahlne (1977), there has been a large body of literature on the foreign market entry and business networking of multinational corporations (MNCs). Most studies have demonstrated that resource commitment, learning, and trust in the foreign markets are facilitated by the development of relationships with local business actors, helping MNCs land successfully in the host markets (Lopez-Duarte and Vidal-Suarez, 2010 and Zaheer, 1995). Nevertheless, it still remains unclear how networking with local actors influences the speed of foreign market entry, if the speed of foreign market entry is regarded as the duration from the initial contact to the start of business operations in the host market. Previous studies (Ghauri et al., 2008 and Hadjikhani et al., 2008) have argued that the socio-political context may be one of the answers that explain the variations in the speed of MNCs’ entry processes into foreign markets. While the entry success of MNCs may be reasonably thought to be dependent upon the business itself and other contexts (Lee & Hadjikhani, 2005), the existing studies in business networking and relationships have rarely paid attention to the MNCs’ speed of foreign market entry under specific socio-political environments, such as the case with the Chinese automobile industry where the local partners are often the host government. Therefore, this paper addresses a fundamental question in the area of IB research: why are there variations in the speed of MNCs’ market entry into emerging markets and whether it is influenced by networking activities/capabilities of multinationals or not? The characteristics of the relationships between MNCs and their partners, suppliers, and socio-political organisations tend to determine MNCs’ relative market position (Ghauri and Holstius, 1996 and Welch and Wilkinson, 2004). At the same time, since those relationships have both a static and dynamic nature, they evolve over time. In this process, the sustenance of good networking in an international market eventually hinges upon elements such as learning and resource commitments (Hadjikhani et al., 2008 and Isobe et al., 2000). However, MNCs’ learning and commitment, interlocked with their self-interests, sometimes may become misunderstood by a host government or raise tension with headquarters. In this paper, we propose that MNCs’ networking with the key local actors facilitates foreign market entry and that learning and commitment in the context of networking affects foreign market entry. This research contributes to further understanding the link between the speed of internationalisation processes and networking in two significant ways. First, the research presented here serves as a fair answer to the question that why some MNCs are able to enter foreign markets more quickly and less problematically. Second, it presents a good reference to suggest whether MNCs coming from similar environmental and institutional settings (emerging market firms entering other emerging markets) are in a better position to achieve this speed.

Scholars in international business have been concerned with a question that how network relationships and local knowledge affect the performances of MNCs’ international operations (Elg et al., 2008 and Vahlne et al., in press). Networking is considered as a determinant of the performance for international market entry. In this study, we have treated networking as an antecedent to internationalisation process, and have examined how MNCs’ speed of internationalisation is related to networking specifically in the context of emerging markets. While MNCs’ relational management has attracted much scholarly attention, the speed of entry into emerging markets has been almost ignored. We have selected the automobile market in China as our research setting because, in order to enter the Chinese automobile market, having a good relationship not only with business actors but also with both central government and local governments is very important (Ghauri & Holstius, 1996). In addition, the rapid growth of the automobile industry in China presents MNCs with sufficient motivation to maintain business networking with the key local actors. This study, assuming networking activities (or networking capabilities) related to three dimensions (actors, activities, and resources), has offered an explanation as to why there are variations in the speed of MNCs’ market entry into emerging markets. The three MNCs illustrated in this paper have shown differentiated processes of foreign market entry from the initial contact to establishment of IJV and of sequential entries after IJV began to operate. For the initial contacts, Citroen China was the earliest, followed by HM China and by GM China. Establishment of Citroen China's IJV was the earliest, followed by GM China and then by HM China. However, it took least time for HM China to execute foreign market entry and for GM China to conduct sequential entries. In this article, we explained the speed of foreign market entry with the role of networking and commitment. In our model, networking affects MNCs’ learning and commitment, which subsequently determines their speeds of foreign market entry. Our findings confirm that entry process was significantly influenced by networking with the key local actors and that early entry and pre-clusterisation provide a good opportunity to develop relationships with key business actors. This study has explored the impacts of networking activities on internationalisation process where the previous studies have identified entry timing and a pre-clusterisation entry strategy as important variables related to the internationalisation process (Gomez-Casseres, 1994 and Guillen, 2003). Citroen made the earliest contact with China and in fact was more favorably considered by Chinese government than GM or HM because an early entry itself was regarded by host government as strong commitment and learning. By the time HM entered China as the late entrant, there were already many MNCs in the automobile market and it was not easy for HM China to penetrate into the existing business network. Our study also reveals that in the Chinese automobile market a pre-clusterisation strategy has facilitated networking with local business actors and increased the speed of market entry, which confirms earlier studies such as Buckley and Ghauri (2004) and Johanson and Vahlne (1977). Pre-clusterisation entry minimises trial-and-error costs in entry process and institutes core competence in home country in the foreign market setting, enabling MNCs to expand the boundary of business networking within a short time. HM China brought a rank of its suppliers, equipment vendors, and auto-manufacturing subsidiaries to China, which led to more investments into China accompanied by HM China. Massive investments by HM's affiliates and suppliers were a good indicator of HM China's commitment and readiness for learning. Pre-clusterisation entry also helped HM China serve Chinese customers with expected product quality. Citroen China instead chose local sourcing but Citroen products, without being sufficiently localised (in other words, without sufficient local networking), did not satisfy consumers or show commitment to host government. GM China also chose local sourcing and, unlike Citroen China, let its IJV partner decide on supplier. The fact that GM China focused on transfer of product technology signaled GM China's strong commitment to Chinese government and lubricated the local networking. Our findings also show that learning and commitment was affected by networking and that the relationships changed over time rather than stayed fixed. Although early entry may offer “first-mover advantage” in relationships with important local business actors, it can also lower likelihood of survival if mutual understanding between MNCs and local business actors is insufficient. For example, Citroen China benefited from early entry for development of relationships with key business actors. Nevertheless, it lost customers and partner trust due to lower levels of learning resulting from unsatisfactory localisation. It thus took more time for Citroen China than GM China or HM China and, accordingly, sequential market entries of Citroen China were bottlenecked and sometimes raised conflicts with its IJV partners. After HM's fast market entry, however, its pre-clusterisation strategy sometimes raised a tension with its IJV partner over the closed network. This type of strategy made HM China's learning quite limited although learning was efficient within the network. Commitment was still strong but was reinforced only among the pre-clustered members. A pre-clusterisation strategy sometimes delayed the speed of sequential entries. GM China, aware of the networking disadvantages due to later entry, endeavored to show greater commitment and to learn about market-conditions of the host country more than the early entrants did. Entry of GM China thus started with establishment of research institute for product design, and patented new technologies developed by the research institute. GM China even proceeded to co-branding jointly with its IJV partner. Demonstrating learning and commitment to its network actors including the IJV partner and the host government, GM China has been active and fast in executing sequential entries in China. Overall, this research illustrates that networking affects learning and commitment of an MNC entrant, which then determines speed of foreign market entry. Depending on whom to network with, how to network, and what to network over, the level of learning and commitment differed as a result. If an MNC's learning and commitment was greater, the firm internationalised faster; if smaller, it had to take more time and resources to complete foreign market entry. Our study makes a considerable contribution towards existing knowledge on networking, which influences internationalisation process, as it reveals that networking facilitates initial market entry as well as subsequent entries. Also, the speed of internationalisation process is closely related to profits, since expanding networking means more opportunities of obtaining complementary resources and political assistances from local business actors. Regarding the implications for best management practice, our study provides some guidelines to foreign firms who consider entry to emerging markets, particularly China. It shows that networking with local and central government is crucial in the entry process and how it can speed up the market entry. Moreover, it demonstrates that local government in emerging markets places a high value on long-term commitment, represented by technology transfer beyond product or production technology. Finally, our study has its limitations as we study only automobile industry and the findings cannot be generalised to other industries.