Internationalization of Middle Size Multinational Enterprises in Chinese Markets: Mirroring Back Effects

In this paper, we study the internationalization strategies of Middle Size Multinational Enterprises (MMNE) in Chinese markets, being quite different from the strategies used by the large multinational companies. The new phenomenon regards the distance that exists between the size of the company (small) and the size of the market (large). The hypothesis is that in the internationalization strategy of Medium size Multinational Enterprises (MMNEs) there could be a circular innovation process leading to innovation. The company can reach a mirroring back phase by mean of which it can innovate the home market business model. Entering culturally distant and large markets can help the company to increase its strategic innovation rate. Three case studies have been used in order to analyze the internationalization process of MMNEs, concerning three Italian companies acting on the Chinese market.

This chapter provides a framework and gives empirical results of an investigation to understand how and why MMNE (medium-size multinational enterprise) internationalisation strategies deviate from the more established strategies of multinational and global companies (MNCs). We study a sample of Italian MMNEs, analysing the strategic and governance models adopted in Chinese businesses and markets and the relationship between the headquarters and overseas branches in China. We investigate two specific factors: 'mirroring effects' and 'acquainted markets'. Mirroring effects relate to adaptation, innovative governance forms of which in our sample are strongly affected by such features as size failing to fit the potential or actual dimension of the market (size factor). Acquainted markets have the effect of decreasing difficulties in accessing countries' institutional externalities and gaining marketing competitive advantages. Our results show that MMNEs tend to replicate their existing business models when they enter 'informed' and 'experienced' markets. Our study explains these differences as an evolutionary path driven by internal capabilities to replicate organisational and business models facilitated by the availability of accustomed and informed markets.