Impact of regualtion on the formation of entry strategy of multinational banks - a case of foreign investment into the Chineses banking industry
The purpose of this thesis is to both explore and explain the formation of entry
strategies of the multinational banks (MNBs) investing in the People's Republic of
China. The research is driven by an interest in understanding the strategic behaviour of
the MNBs as they are presented with huge investment opportunities but potentially
higher risks caused by the market and regulatory structures. The study explains the
differences in entry strategies of the MNBs and explores the causes of convergence in
their entry behaviours.
The study is grounded in the eclectic theoretical paradigm based on which a conceptual
framework is developed to incorporate three enabling factors for the competitive
advantages of the MNB in the local market. The three enabling factors are also termed
the OLI framework with regard to ownership-specific advantages (0), location-specific
advantages (L) and internalisation-specific advantages (1). Correspondingly, three areas
of literature are focused on in this research, namely, the resource-based view, the
institutional theory and internalisation theory.
The research design consists of in-depth case studies of ten multinational banks. The
cases are analysed based on strategic entry decisions in four dimensions, namely, the
entry motive decision, the entry mode decision, the management control decision and
the marketing orientation decision. The cases are explored by means of semi-structured
interviews of thirty-five senior bank managers based in the local branch in Beijing
and/or Shanghai in China.
Four patterns of strategic entry decision are identified through this research. Using
pattern-matching techniques of analysis, the research provides evidence to support two
research propositions; they are: i) the strategic entry decisions of the multinational
banks in China are different. The differences are mainly attributed to the differences of
the bank specific resources and the existing strategies of the parent banks; and ii) under
the coercively imposed regulatory conditions and the underdeveloped market
conditions, the strategic entry decisions of the multinational banks in China have
tended to converge.
This thesis contributes to existing theoretical, empirical and practice literature. It
integrates multiple perspectives in applying the OLI framework. The developed OLI
framework both explains and explores the formation of entry strategy of service
multinationals. It emphasises the strategic behaviour of the MNB and provides insights
to the MNB regarding how to integrate strategic entry decisions with operation and
behaviour. It also provides the regulators with the way to assess the impact of
regulation on competition structure.
Advisor:Nellis, Joe (supervisor)
School Location:United Kingdom
Source Type:Master's Thesis
Date of Publication:07/01/2007