Foreign Investment And Corporate Governance

This book reports on foreign investments in transitional economies and the corporate governance of international strategic alliances in China. The book reviews the problems encountered by these international strategic alliances, provides significant empirical evidence of foreign investment decisions and profiles corporate governance and organizational learning in strategic alliances. Based on research into 1000 firms in China, it draws important conclusions for theory and practice.

Yanni Yan is Associate Professor in International Business and Management Studies at the City University of Hong Kong.

List of Figures

ix

List of Tables

x

Preface

xi

Acknowledgements

xiv

List of Abbreviations

xvii

Part I Foreign Investment in Transitional Economies

1 The Rise of the Transitional Economies

3

(23)

Introduction

3

(1)

Outlook of the transitional economies

3

(2)

Strategic profile of foreign investment

5

(2)

Economic profile of foreign investment

7

(1)

Socio-cultural profile of foreign investment

7

(2)

Foreign investment in the industrial sector

9

(1)

Geographical distribution of foreign investment

10

(1)

Overview of the Chinese domestic investment profile

11

(2)

Market entry modes of foreign investment

13

(7)

Principal issues identified

20

(2)

Plan of the book

22

(3)

Summary

25

(1)

2 Foreign Direct Investment

26

(27)

Introduction

26

(1)

The theory of foreign direct investment

26

(8)

Foreign investment and economic liberalization

34

(5)

The implications of opening Chinese markets

39

(4)

Summary

43

(10)

Part II Building Blocks for Corporate Governance

3 Building Blocks for National Institutions

53

(21)

Introduction

53

(1)

Reform of national financing

54

(4)

Reform of political institutions

58

(7)

Reform of national taxation

65

(4)

Encouraging foreign investment firms

69

(4)

Summary

73

(1)

4 Building Blocks for Corporate Governance

74

(21)

Introduction

74

(1)

Theoretical perspectives on corporate governance

74

(3)

Corporate governance 'at the national level

77

(7)

Corporate governance at the organizational level

84

(10)

Summary

94

(1)

5 Research Undertaken into Foreign Investment and Corporate Governance

95

(24)

Introduction

95

(1)

The formation model

95

(2)

The ownership investment model

97

(1)

The corporate governance model

98

(2)

The corporate culture model

100

(1)

The organizational learning model

101

(1)

Research measure construction

101

(3)

Pilot study

104

(1)

Interview procedure

105

(3)

Sampling

108

(1)

Choices of industrial sectors

109

(1)

Data collection

110

(2)

Coding

112

(2)

Summary

114

(5)

Part III Managing an International Strategic Alliance

6 Forming an International Strategic Alliance

119

(23)

Introduction

119

(1)

Ownership determinants: resource-based theory

119

(2)

Ownership leverage: resource dependence theory

121

(2)

Ownership, localization and internalization theory

123

(3)

Developing a checklist for forming a strategic alliance

126

(3)

Strategic motives

129

(2)

The feasibility study

131

(7)

Summary

138

(4)

7 Ownership Investments and International Technology Transfer

142

(21)

Introduction

142

(1)

Ownership configuration

142

(8)

International technology

150

(3)

Motivation for technology transfer

153

(2)

Process of technology transfer

155

(3)

Absorptive capacity and technology transfer

158

(2)

Technology transfer performance

160

(2)

Summary

162

(1)

8 Exercising the Strategic Role of the Board and Management

163

(22)

Introduction

163

(1)

Strategic role of the board of directors

163

(12)

The strategic alliance's management

175

(9)

Summary

184

(1)

9 Corporate Culture and an International Strategic Alliance in Transition

185

(24)

Introduction

185

(1)

National cultural model

185

(4)

Management of corporate culture

189

(19)

Summary

208

(1)

10 Organizational Learning

209

(24)

Introduction

209

(1)

Learning conceptualization

209

(1)

Achieving learning advantages

210

(6)

Dynamic organizational learning

216

(4)

Determinants of organizational learning

220

(4)

Learning achieved throughout an alliance's hierarchies

224

(5)

Summary

229

(4)

Part IV Implications for Research and Practice

11 What We Still Need to Learn

233

(21)

Introduction

233

(1)

Performance conceptualization

233

(4)

Objective versus subjective performance measures

237

(3)

Strategic alliance formation

240

(2)

Ownership investments

242

(2)

Corporate governance

244

(1)

Corporate culture

245

(1)

Organizational learning

246

(3)

Building main themes for foreign investment and corporate governance

249

(3)

Summary

252

(2)

Appendix I: Major Tax Payments for Foreign Firms in China

254

(6)

Appendix II: Interview Questionnaire for Forming an International Strategic Alliance

260

(9)

References

269

(7)

Index

276

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Foreign Investment And Corporate Governance In China

Summary

Author Biography

Table of Contents

Supplemental Materials