The role of international experience in speed of entry: Empirical evidence from Chinese innovative firms

Abstract

By analyzing the dynamic path of internationalization, this study attempts to explain the entry mode choice, location choice, and speed of entry in the process of internationalization from the learning results obtained from previous international activities. Our research shows that the speed of the entry process depends on the type of experiential learning generated by the implicit decision-making in the process of Internationalization: the entry mode choice and the market location choice. We find that the experience accumulated in the host country has an inverted U-shaped effect on the speed of entry; while the experience accumulated of the entry mode has a U-shaped impact on the speed of entry. We perform an event history analyses(EHA) on 153 Chinese innovative firms with 905 OFDI observations during the period from 1991 to 2015, and analysis what and why is the paths of internationalization of Chinese firms. We find that Chinese innovative MNEs have more likelihood to choice the entry mode of acquisition and WOS than other entry modes in OFDI activity, and there is a higher probability that the Chinese innovative MNEs choice the market location of developed countries than developing countries in OFDI activity. Most importantly, we find that accumulated experience in host country has an inverted U-shaped impact on the speed of internationalization operation with acquisition mode and the speed of internationalization in developed countries; while accumulated experience in focal entry mode has an U-shaped impect on the speed of internationalization operation with branch or WOS mode and the speed of internationalization in developing countries. This claim is supported by both non-parametric and parametric tests in the EHA. Our research highlights the short-term and long-term consequences of different types of paths associated with the internationalization process.