Relationships between business factors and performance in internationalization : An empirical study in China

Purpose – While internationalization of firms can be a source of growth in profitability, it can also result in huge losses due to the risky internationalized environment. Success in the home countries does not guarantee success internationally. The objective of this study is to identify the main business factors affecting performance of firms in the process of internationalization. Design/methodology/approach – Ten business factors have been selected to investigate their relationship with the business performance in the internationalization process of Chinese manufacturing firms. The ten business factors are transformed into four dimensions (principal factors) using the method of factor analysis. Using the categorical regression method, relationships between return on assets (ROA) and the four dimensions extracted are examined. Findings – The findings reveal that marketing capability of firms plays the most important role in improving performance of firms that embrace internationalization. Research limitations/implications – The study is confined to data collected from the Yangtze River Delta region via the method of survey, and it is generally agreed that China is a large market composed of distinctively different regional sectors, and there are significant differences in the level of development among the regions. Practical implications – Performance of firms that embrace internationalization is affected by different business factors. If these factors could be identified, it would be possible to engineer the performance of firms. Originality/value – From a political perspective, the research provides a better understanding on how to improve the internationalization performance for firms, which do not have such experience in the emerging economies.