Internationalization of the Automotive Industry by Extending IOL3 model: A Case Study of Geely Automobile

Abstract

Chinese companies have been heavily expanding their businesses globally during recent decades. In the literature, studies examine the dynamics behind their expansion strategies and build multinational Chinese companies called 'dragon multinationals.’ Pointing out the shortcomings of the ownership-location- internalization (OLI) paradigm to explain the internationalization of these dragon multinationals, the linkage-leverage-learning (LLL) model was introduced by Mathews (2006). It was extended to the inward linkages-outward linkages-leverage- learning (IOL3) model by Lu et al. (2017). This paper aims to investigate forwarded linkages to understand how these linkages are utilized during further expansions of Chinese multinational companies (MNCs) in developing countries. Inward linkages that Geely gained through earlier acquisitions were studied through secondary sources. Then, Geely's latest acquisition of Proton was examined to identify forwarded linkages. Interviews were conducted with the management of Proton and its suppliers to define sources of know-how transferred to Proton and classify them as direct and indirect forwarded linkages.

Keywords

• linkage-leverage-learning model
• inward linkage
• outward linkage
• direct forwarded linkage
• geely automobile