Supply Chain Networks,Market Environments and Chinese Enterprises"Going Global in Groups"
This paper investigates the economic phenomenon of Chinese firms entering developing countries in a globalised manner as a group.Drawing on the literature on firm heterogeneity and supply chain networks,it proposes a theoretical model to explore the relationship between group globalisation and host country market environments,and empirically tests research hypotheses using firm-level data.The baseline estimate and robustness checks reveal that investment in supply chain networks can eventually drive firms to make direct investments in the same country,and this effect is more pronounced in host countries with weaker market environments,indicating that the group globalisation approach can help firms overcome market incompleteness in the host country.After a series of robustness tests,such as the instrumental variables estimation,the above results remain solid.Analysis of the transmission mechanism suggests that supply chain network investment can help firms overcome market incompleteness in the host country through information transmission and production and sales support.In addition,the analysis of firm heterogeneity shows that group globalisation is more useful for small,young and less capital-intensive firms to overcome the incompleteness of the host country market.These findings enrich the understanding of the phenomenon of firms globalising in groups and provide policy implications for strengthening national supply chain networks with a view to better promoting the globalisation of firms in a healthy and orderly manner.
supply chain networksmarket incompletenessoutward foreign direct investment(OFDI)