Foreign Business Engagement by New Zealand Firms with China: Governance Structures, Management Controls and Growth

Abstract

China’s economic rise in the world is of the utmost importance for the New Zealand economy and its firms. This thesis examines the question, “How can New Zealand firms achieve positive growth when they engage in business with China?” through a theoretical framework using two theoretical perspectives: an internationalisation perspective and an economics of institutions perspective. Firm performance will be assessed by considering what events or actions either accelerated or inhibited business growth over three key engagement stages. The research questions addressed are: 1. At the pre-engagement stage, which growth accelerators and growth inhibitors are important for firms in assessing the China market in terms of their potential impact on growth? 2. At the initial engagement stage, which growth accelerators and growth inhibitors are important for firms when selecting the mode and location of their initial business engagement with China? 3. At the continuing engagement stage (and the possible feedback loops within this stage), which growth accelerators and growth inhibitors are important for firms when managing the evolution of their business engagement in China? 4. Over the different stages of firms’ business engagement with China, how was a firm’s performance (i.e., relative to growth) in later stages been affected by the quality of its decisions and performance in earlier stages? A multi-case research approach was used to study selected New Zealand firms doing business in and with China. This study finds that, consistent with the theoretical framework, the most important factors that affected the case study firms’ ability to achieve positive growth in their foreign engagement with China were embodied in the internationalisation and the economics of institutions perspectives, and they capture the business engagement of the case study firms over three key engagement stages. Positive growth came from a complex range of sequential and interrelated decisions, actions, and processes which were put into place at appropriate times. The foreign engagement outcome with the fastest and/or highest growth had a cascade of growth accelerators that outweighed growth inhibitors. Over the long run, the system is fully interconnected. The choices around governance structures and mechanisms (including management control systems) were important.