Title: Nonmarket strategies and behaviours for MNEs to build a congenial political economic environment in Mainland China

Authors: Yongqiang Gao

Addresses: School of Management, Huazhong University of Science and Technology (HUST), Wuhan City, Hubei Province, 430074, P.R. China

Abstract: Successful investing in China requires investors to master a complex political and regulatory environment. Three basic theories – institutional theory, resource dependency theory and agency theory – are useful to explain why and how Multinational Enterprises (MNEs) take nonmarket strategies and behaviours to deal with a host government. Based on these theories, this paper proposes three basic strategies, namely, guanxi strategy, competitive strategy and leverage strategy, for MNEs to deal with the Chinese government and build a congenial political economic environment. The reasons why these strategies are valid and how to use them are also discussed.

Keywords: non-market strategies; multinational enterprises; MNEs; China; institutional theory; resource dependency theory; agency theory; foreign investment; guanxi strategy; competitive strategy; leverage strategy; Chinese government; political environment; business environment; economic environment; multinationals.

DOI: 10.1504/IJBE.2008.016843

International Journal of Business Environment, 2008 Vol.2 No.1, pp.89 - 100

Published online: 25 Jan 2008 *

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