As increasing numbers of Chinese companies expand into foreign markets, they would do well to consult the results of a new research study co-authored by CEIBS Professor of Strategy and International Business Klaus E. Meyer when deciding what types of managers to hire to support their internationalization strategy. One of the fastest ways for emerging market companies to catch up with established multinational players is to hire talent with international experience. As China’s economy has prospered over the past decade, it has created a growing pool of attractive jobs for the many Chinese who went abroad for education and career opportunities, and eventually want to return home. But as Professor Meyer’s results show, companies are not always able to reap the benefits from the international experience of these returnees.

In their study, Professor Meyer and his co-authors Lin Sui, Yi Li and Zijie Li looked at eight years (2001-2008) of data from 164 Chinese electronic manufacturing firms to explore how the international leadership experience contributed by managers returning from abroad effected the firms’ internationalization. They also compared how returnee managers fared in their efforts to contribute towards internationalization at firms under different types of corporate ownership (central-state, local-state, private and foreign ownership).

Their results show that the privately owned Chinese firms were best at leveraging the international leadership experience of returnees in pursuing Foreign Direct Investment (FDI) initiatives. State-owned firms under the central government had similar good results. On the other hand, Chinese returnees were not able to have much effect on the internationalization strategies of foreign-owned firms and firms under the auspices of local governments. The researchers believe this is most likely because foreign-owned firms already have well-established international cultures and strategies, and the talents in place who are capable to execute them, while local government SOEs simply don’t have enough of an international vision to properly utilize the international leadership experience and capabilities of the returnees. Privately-owned Chinese companies and central government run SOEs operate in a business environment that makes them more open to utilizing the contributions returnees can make towards FDI and other internationalization strategies, because it is more important to their strategies.

A particularly poignant finding is that it is the international leadership experience of returnee managers, and not merely education and/or general working experiences abroad that enables them to contribute to firm internationalization.

The results of the study appear in the paper entitled “Leadership Experience meets Ownership Structure: Returnee Managers and Internationalization of Emerging Economy Firms” which will be published by Management International Review. Coauthors Lin Cui and Yi Li are based at the Australia National University in Canberra, while Zijie Li is based at University of International Business and Economics in Beijing.

View the paper

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