EO-Performance relationships in Reverse Internationalization by Chinese Global Startup OEMs: Social Networks and Strategic Flexibility.

Abstract

Due to the context-sensitive nature of entrepreneurial orientation (EO), it is imperative to in-depth explore the EO-performance mechanism in China at its critical, specific stage of economic reform. Under the context of "reverse internationalization" by Chinese global startup original equipment manufacturers (OEMs), this paper aims to manifest the unique links and complicated interrelationships between the individual EO dimensions and firm performance. Using structural equation modeling, we found that during reverse internationalization, proactiveness is positively related to performance; risk taking is not statistically associated with performance; innovativeness is negatively related to performance. The proactiveness-performance relationship is mediated by Strategic flexibility and moderated by social networking relationships. The dynamic and complex institutional setting, coupled with the issues of overcapacity and rising labor cost in China may explain why our distinctive results occur. This research advances the understanding of how contingent factors (social network relationships and strategic flexibility) facilitate entrepreneurial firms to break down institutional barriers and reap the most from EO. It brings new insights into how Chinese global startup OEMs draw on EO to undertake reverse internationalization, responding the calls for unraveling the heterogeneous characteristics of EO sub-dimensions and for more contextually-embedded treatment of EO-performance associations.