Internationalization, Corporate Governance, and Global Competitiveness: A Study of Entrepreneurial Firms in the Pearl River Delta

The Pearl River Delta (PRD) in southern China is a major world-manufacturing hub populated by small- to medium-sized firms; many are family-owned and run by entrepreneurs based in Hong Kong, Macau, and Taiwan. With a population of 56 million and a land area about one tenth the size of the State of California, the region produces over 10 percent of China’s GDP.

In April 2009, the local party chief announced that Beijing had set the goal for “the PRD’s economy to surpass that of South Korea in the next decade.” He also wanted the region “to reduce its dependence on resource-intensive industries, and increase the number of high-tech manufacturing and service industries.” More recently, in light of the worldwide declining asset values resulting from the 2008 global financial crisis, Beijing has been urging mainland firms, including those in the PRD region, to “go abroad” to invest and compete in overseas markets.

This call for firms’ international expansion, together with the mandate to move the PRD up the value-chain, makes the region an excellent research site to study China’s industrial policy and its impact on local economic and social development. Additionally, because of the changes mentioned above, the PRD also provides a natural quasi-experimental setting for investigating organizational learning and adaption to shifting environmental conditions, particularly those requiring the development of new capabilities for firm survival.

Professor Joseph L. C. Cheng will present preliminary findings from his research on the PRD region, with a focus on the entrepreneurial firms and how they acquire new internationalization knowledge and corporate governance practices to help enhance their competitiveness in the global marketplace. He will also discuss the findings’ implications for designing public policies and corporate programs to facilitate economic reform and enterprise development.