Amsterdam Business School
The internationalization of sharing
economy companies from emerging markets
Author: Xiaoxuan He
Student number: 11843098
MSc. in Business Administration -International management
12/8/2018 Final
UvA
Statement of originality
This document is written by Student Xiaoxuan He who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
ABSTRACT
The purpose of this paper is to understand the internationalization pattern of sharing economy companies from emerging countries, in terms of the internationalization speed and location choice. The internationalization speed and be both the time between a firm’s establishment and its first overseas expansion and the average number of foreign countries entered per year between the first expansion and last expansion. The location choice can be at both country level and city level. I use the qualitative method and case study to do the research. By studying 9 Chinese sharing economy companies from three industries. I find that it takes sharing economy companies from emerging countries less time to conduct the first foreign expansion than traditional companies from emerging countries. These sharing economy companies are more likely to enter global cities, and most sharing economy companies from emerging countries choose developed countries as their target locations.
The contributions of this thesis can be both practical and theoretical. This paper fill the gap in the research of sharing economy companies exploring the internationalization of sharing economy companies form emerging countries, thus providing lots of knowledge about sharing economy companies. Emerging countries’ sharing economy startups which want to internationalize but haven’t internationalized can use the findings of this thesis as the template to guide their internationalization.
TABLE OF CONTENT
1. Introduction... 6
2. Literature review... 10
2.1 Sharing economy...10
2.2 Business model framework...13
2.3 Sharing economy business model...15
2.4 Difference between sharing business models and traditional business models... 19
2.5 Internationalization... 21
2.6 Internationalization by firms from emerging economies... 25
2.7 Internationalization by digital MNCs... 27 3. Theoretical framework... 29 4. Methodology... 40 4.1 Research approach... 40 4.2 Case selection...42 4.3 Data collection... 47 4.4 Data analysis... 49 5. Results... 52 5.1 Within-case analysis...52
5.1.1 B2C sharing economy companies...52
5.1.2 P2P sharing economy companies...59
5.2 Traditional companies...64
5.3 Cross-case analysis...66
6. Discussion... 71
6.2 Contributions and Implications...75
6.3 Limitations and Future Research... 77
7. Conclusion...78
Reference...81
1.
Introduction
Sharing is a common practice in human society since ancient time (Belk, 2009), people has always shared goods with their relatives and friends. In recent years, with the rapid development of the Internet and ICT technologies, the sharing behavior can be implemented on a large scale (Hamari et al., 2016; Zervas et al., 2017). In the past 15 years, the sharing economy has experienced rapid growth and has become a very popular socio-economic phenomenon (Cohen & Kietzmann, 2014). The popularity of the sharing economy promotes the emergence of sharing economy companies and sharing economy business models. Based on the market structure, sharing economy companies can be divided into business-to-consumer (B2C) and peer-to-peer (P2P) (Schor, 2016), and digital platforms are key to both kinds of sharing economy companies. B2C sharing economy companies own both the digital platform and the goods shared. They provide their assets on the digital platform. While P2P sharing economy companies only provide the platform to match the demand and supply side (Cannon & Summers, 2014; Schor, 2016).
2017 was the year when China's sharing economy was booming. The industry scale reached 5.72 trillion yuan, and the total investment on the industry was 100 billion yuan. The sharing economy will continue to grow in China at an annual rate of about 40 percent in the next few years, according to China State Information Center. By 2020, the sharing economy will be 10 per cent of China’s GDP and 20 per cent in 2025. With the rapid development of the sharing economy in China, many Chines
sharing economy companies have emerged.
As the world’s largest emerging country (Jain, 2006), China has the typical characteristics of emerging countries (Luo et al., 2010). In recent years, not just in China, the sharing economy in other emerging market countries has gradually developed and has spawned many sharing economy companies, such as 99, a Brazilian car sharing company and farMart, an Indian agricultural machinery sharing company. After the success in domestic market, these emerging companies’ sharing economy companies start to conduct the internationalization. Internationalization refers to the process by which a company expands its business from its domestic market to foreign countries (Johanson & Vahlne, 1977; Stephen et al., 1986). According to Chetty (2014), internationalization speed and location choice are two important components of internationalization. Some scholars studied the internationalization of emerging countries’ multinational enterprises (MNEs) and put forward that these companies which lack resource and knowledge always internationalize slowly (Luo & Tung, 2007) and are more willing to enter other emerging countries (Sirkin et al., 2008). However, these scholars only studied traditional companies. Representing a type of digital companies, sharing economy companies may have different internationalization patterns. Digital companies tend to internationalize fast and are likely to choose developed countries as target locations (Mahnke & Venzin, 2003; Brouthers et al., 2015). However in these studies, scholars only chose digital companies from developed countries as research objects. The literature on digital MNEs has underexplored digital MNEs from emerging countries.
On the other hand, the literature on MNEs from emerging markets overlooked digital MNEs from emerging markets. Furthermore, as mentioned above, B2C sharing economy companies differ from P2P ones as B2C companies own and provide the goods shared. This difference may have an impact on the internationalization of B2C sharing economy companies. Because when internationalizing, B2C sharing economy companies have to make the goods physically present in the host country. This process will take time and cost money. Based on the research gap, this study aims to answer the following research question:
How do sharing economy companies from emerging countries internationalize? This question can be divided into three sub questions:
1. What is the internationalization speed of sharing economy companies from emerging countries, compared to traditional companies from emerging countries?
2. What is the difference between the internationalization speed of P2P sharing economy companies from emerging countries and that of B2C sharing economy companies from emerging countries?
3. What are the location choices of sharing economy companies from emerging countries?
The qualitative method has been selected to to conduct this study, because it enables researchers to study each characteristic of internationalization in depth and in
detail (Patton, 1990). In addition, the internationalization of emerging countries’ sharing economy companies is an underexplored field, and the qualitative method is suitable for exploring novel fields (Yin, 2003). The case study was chosen as the research approach, because it’s appropriate when the question to be answered is a “why” and “how” question (Yin, 2003). Nine Chinese sharing economy companies from three industries were selected as cases and they were divided into B2C and P2P to analyze respectively.
The paper is structured as following. First part is the literature review. In this part, some background knowledge about the main terms in this research is given to readers. This includes “sharing economy”, “sharing economy business model” and “internationalization”. Then based on these extant literature, several propositions on the research topic will be put forward. Next part is the methodology. This part describes which research method and samples were chosen and the reason why they were selected. In addition, this part will also clarify how to collect and analyze the data. After that, the results which is gotten from data analysis will be shown followed by the discussion of the results. In the discussion part, the contributions and limitations are discussed. Finally, a conclusion part will be shown to end this paper.
This thesis has both practical contributions and theoretical contributions. This paper contributes to the literature on sharing economy, by studying the internationalization of sharing economy companies and by focusing on sharing companies from an emerging country. By focusing on the internationalization of a
specific type of digital companies and by exploring digital companies from emerging countries, this paper also makes contributions to the literature on internationalization. Emerging countries’ sharing economy startups which want to internationalize but haven’t internationalized can use the findings of this thesis as the template to guide their internationalization.
2. Literature review
2.1 Sharing economy
The sharing economy is also known as shareconomy (Katz et al., 2014), collaborative economy (Gruszka, 2017), collaborative consumption (Belk, 2014), peer economy (Cheng, 2014). As a new socio-economic phenomenon that has been very popular in recent years, the sharing economy aims to use digital technology to foster a more collaborative and sustainable society (Heinrichs, 2013). In the past 15 years, the sharing economy has experienced rapid growth and gained great appeal among businesses and in the society (Cohen & Kietzmann, 2014).
The increase in the popularity of this term is also accompanied by an increasing controversy on its definition (Martin et al., 2015). Although the “sharing economy” has aroused widespread concern in the academic field, scholars still can’t reach a consensus on the definition of the term “sharing economy”. For instance, Frenken and Schor (2017) defined the sharing economy as “consumers granting each other temporary access to under-utilized physical assets (“idle capacity”), possibly for money”. Acquier et al (2017) put forward that access economy, platform economy, and community-based economy are three core pillars of the sharing economy. In other
words, the sharing economy is an economic system encouraging people to share underutilized assets on digital platforms through P2P leasing and exchange, with the aim of increasing social bonding. According to these definitions, online platforms are an important tool for the sharing economy. However some scholars claim that these definitions are a little narrow. Because under these definitions, only P2P activities and single purpose of initiatives are considered and the form of exchange is limited to temporary access. In fact, B2C sharing is also a form of the sharing economy, and the purpose of the exchange can be both for-profit and non-profit (Botsman & Rogers, 2010; Acquier et al., 2017). Moreover, the form of the exchange behavior can be the transfer of ownership or mere the temporary access to the asset (Hamari et al., 2016).
Botsman (2013) defined the sharing economy in a broader way as “an economic model based on sharing underutilized assets from spaces to skills to stuff for monetary or non-monetary benefits”. This definition includes both P2P and B2C sharing activities and seems to be more comprehensive. According to this definition, goods shared under the sharing economy should be underutilized assets. However, in many cases, assets are no need to be idle. For example, some people choose to become full-time Uber drivers and make a living from it. In this case, cars are not idle goods. In addition, B2C sharing economy companies own and provide the goods, for them these assets are not idle.
In order to generate an appropriate definition that can be used in this paper, I made some changes to Botsman’s definition and formed the definition as: the sharing economy is the market where individuals or organizations exchange or share assets
(mainly idle) through digital platforms. This definition includes P2P and B2C initiatives, for-profit and non-profit dimension and two forms of exchange behavior. Furthermore, under this new definition, assets are no need to be idle.
Scholars and practitioners which support the sharing economy argue that it has a positive impact on the economy, environment and society. They have posited that the sharing economy has created new growth points for economic development and has provided people with an additional source of income. According to Geron (2013) the sharing economy has created tremendous wealth for people and the economic benefits it brings are difficult to estimate. The great potential of the sharing economy has attracted many investors. These investors regard the sharing economy as a new business development trend and invest millions of investments in related start-ups (Alsever, 2013). By encouraging people to share or exchange idle assets, the sharing economy is able to integrate fragmented and sub-utilized resources in society. In this way, the sharing economy improves the efficiency and optimization of resources (Muñoz & Cohen, 2017). In addition, car sharing, which reduces people’s use of vehicles, is conducive to saving resources and reducing environmental pollution (Cohen & Kietzmann, 2014). When it comes to social value, through intense sharing and exchange activities, people have more chances to get to know each other and increase the social bonds (Acquier et al., 2017), which contributes to a harmony community or society (Hamari et al., 2016).
According to Belk (2009), sharing has always been a common behavior in human society. However, traditional sharing behaviors often occur between relatives
and friends, while the sharing economy emphasizes “stranger sharing” (Frenken & Schor, 2017). Sharing as an alternative to commodity exchange has reshaped social relations, strengthened interpersonal relationships, saved resources, and produced certain synergies (Belk, 2007).
In recent years, thanks to the popularity of the Internet and the development of ICT technologies, this sharing and transaction behavior has been widely disseminated and implemented on a large scale (Cohen & Kietzmann, 2014; Hamari et al., 2016; Zervas et al., 2017). More and more people began to accept the concept of “co-ownership” and participate in the sharing economy. Under such a circumstance, some people started to think how to bring together those who have needs for sharing. Thinking about this issue has contributed to the birth of sharing economy business models and the emergence of sharing economy companies (Stead & Stead, 2013, Cohen & Kietzmann, 2014).
2.2 Business model framework
In the past 20 years, the business model has become a very popular term in various fields, from management and consulting to entrepreneurship and investment. The popularity and widespread use of this term means that business models are becoming more and more important in the business arena.
The business model has long been part of the corporate business and economic behavior (Teece, 2010). Different scholars have different definitions for “business model” and these definitions of the business model can be divided into two categories. The first type of definition focuses on describing the way companies engage in
business. For example, Gilbert et al. (2003) and Johnson (2010) used the business model to refer to how a company does business, both specific ways and means to make money. While other scholars state that the business model describes the business of a company, and how the enterprise organize and conduct its business to achieve its goals (Afuah & Tucci, 2002; Chesbrough & Rosenbloom, 2002). Massa et al (2016) state that business models reveal the nature of the company's products and services, and determine the ways and channels for firms to provide goods and services to consumers.
In recent years, the rapid development of ICT and the maturity of Internet has changed companies’ relationship with suppliers and consumers (Brynjolfsson & Hitt, 2005), increasing the cooperation between enterprises and third parties. On this basis, Amit and Zott (2009) consider the business model as a system of interdependent activities, which not only include operations inside the firm, but also span the company's boundaries, covering the company's cooperation with its partners which may include suppliers and customers. These activities, which are related to firm’s business operation, enable companies and their partners to create value and share the created value together.
The second type of definition is based on the components of business models. These definitions break the business model into different elements and describe it through these elements. Scholars who support such definitions have proposed a reference model consisting of elements and their relationships to describe the company's business model. For example, Hamel (2000) stated that the business model
is made up of network, customer logic, resources and strategy. And he defines the business model through these four components. In 2010, Osterwalder and Pigneur introduced the “business model canvas” to describe how an organization creates, delivers and captures value. This framework is composed of nine building blocks and they are customer segments, value propositions, channels, value networks, revenue streams, cost structure, key partnerships, key activities and key resources. In this paper this definition will be adopted.
2.3 Sharing economy business model
In 2015 Owyang conducted a research on new sharing economy companies which are engaged in various industries. By reviewing and researching these new startups within the sharing economy, Owyang (2015) suggested that sharing economy models showed a rapid growth and covered almost every aspect of our daily life, such as goods, space, mobility and so on.
Scholars have classified sharing economy business models based on different dimensions and the most common categorization is based on the market structure (Schor, 2016). According to the market structure of the sharing platform, sharing business models can be divided into two categories: B2C sharing business model and P2P sharing business model (Schor, 2016). If different sharing business models are adopted, the value proposition of these companies will also vary (Kosintceva, 2016). From the perspective of value proposition, Kosintceva (2016) refined Schor’s categorization criteria and outlined two types of sharing business models: Access-based sharing business models (correspond to B2C sharing business models)
and Marketplace sharing business models (correspond to P2P sharing business models). For ease of presentation, in this article, Schor (2016)’s taxonomy will be used. In the following parts, P2P and B2C sharing business models will be compared from value propositions, value networks and revenue streams.
Within B2C sharing business models, companies’ main value proposition is offering access to tangible assets through their online platforms (Schor, 2016). Sharing economy companies own and lease these assets. The role of digital platforms is less important than that in P2P sharing business models, as they are mere tools these companies use to offer resources. On the other hand, companies adopting P2P sharing business models play a role of bridge which connects supply and demand side. By developing and providing digital platforms, they build an online market where individual suppliers can rent or exchange idle goods and services with demanders (Belk, 2014; Heinrichs, 2013). In this case, the value proposition is only providing online platforms to match suppliers and demanders (Cannon & Summers, 2014).
As mentioned in the previous section, the sharing economy mainly consists of two forms of exchange behavior: the transfer of ownership and the temporary access to asset (Hamari et al., 2016). Sharing economy companies or platforms can facilitate these two modes simultaneously through multiple economic activities. Some platforms enable users to transfers ownership through donations, purchases, and other actions. The most typical representative platforms are Ebay and Marketplaats which are second-hand goods sharing platform. On the other hand, the temporary access to goods means that people or organizations share or rent their goods to others for a
limited period of time (Bardhi & Eckhardt, 2012). Airbnb, which is a good example, provides an online platform where host can offer their idle houses. By paying a fee, guests can live in these houses within a certain time limit. Another example can be bike sharing. The temporary access to goods is the most common form of sharing and also widely adopted by mainstream sharing economy companies. In this paper, I’ll focus exclusively on companies using this kind of sharing mode.
Sharing business models bring enormous benefits to users in multiple ways. Sharing business models create a new way for people to earn money, because suppliers can provides idle goods to get a return on money. For demanders, sharing platforms give them access to expensive goods which they can’t afford, such as cars. And they can rent or buy goods at a lower cost on the platform than from merchants (Zervas et al., 2017). Users can publish and view information on these platforms anytime, anywhere. Sharing platforms which bring together the supply side and demand side, reduce the time it takes for both sides to find each other (Cannon & Summers, 2014). Meanwhile, to a certain extent, the sharing model is conducive to ecological protection and resource conservation. It encourages the use of idle resources, reduces carbon emissions, and also makes positive contributions in increasing employment and alleviating social issues such as excessive consumption and poverty (Heinrichs, 2013; Schor, 2016; Hamari et al., 2016).
There are significant differences between P2P sharing business models and B2C sharing business models in their value networks. When discussing about this issue, these two sharing business models will be distinguished from the dimension of
suppliers, consumers, participants, and users. As explained by Schor (2016), suppliers are those who provide goods and service, while consumers are those who consume assets. Participants include all parties participating in the transaction. Under the B2C sharing business model, sharing economy companies play a dual role of supplier, because they not only provide the platform but also own the goods and need to provide them in B2C platforms. Consumers and users are the same thing: individuals who consume the asset for a certain price (Kosintceva, 2016). Participants consist of sharing companies and consumers. When turning to the P2P sharing business model, the situation becomes more complex. Within P2P sharing business model, suppliers are divided into two sides: platform organization which supplies the platform and individual suppliers who offer products to share on the platform. In P2P platforms, users consist of both individual suppliers and individual consumers, so the challenge for sharing companies is to build a network both on the supply and on the demand side. Sharing economy companies, individual suppliers and consumers are all participants under P2P sharing business model.
There are also differences existing in the revenue streams of these two sharing business models. As mentioned above, B2C sharing business models use online platforms to rent assets owned by companies. The revenue streams of these business models vary across business (Kosintceva, 2016), but the main source of revenue is rental income. When talking about the P2P sharing business model, the pattern is quite different. Companies adopting this business model have multiple ways to earn money. For instance, companies can charge users a certain amount of annual or
monthly platform usage fees. They can also extract a certain percentage from the renter’s turnover or the borrower’s consumption (Olson & Kemp, 2015). Sometimes, companies can set a fee on the overall transaction cost as well (Kosintceva, 2016). Apart from charging users, sharing platforms can also use their own user volume and page view to make money from advertising fees.
2.4
Difference between sharing business models and traditional
business models
According to Van Alstyn et al (2016), traditional (or conventional) business are also called pipeline business. These companies realize value creation on the basis of the classic value-chain model. Their business activities are always linear: the production materials are put into one end of the value chain and converted to the final product after going through a series of steps.
Sharing economy business models have numerous differences with the traditional business model. The most prominent one is the use of digital platforms. As mentioned above, platforms are important channels both for B2C sharing business model and P2P sharing business model (Heinrichs, 2013; Schor, 2016). A company adopting a P2P sharing business model uses the platform to connect supply and demand sides, while an organization adopting a B2C sharing business model uses the platform to provide its own products. In the contrast, platforms are not necessary for traditional businesses, and many traditional companies fail to create platforms (Van Alstyn et al., 2016). They mainly rely on physical stores to display and sell their goods.
Within sharing business models, with the help of the digital platform, there is more active interaction between suppliers and demanders than traditional business model. Suppliers (both companies and individuals) can publish information on the platform anytime, anywhere, and demanders can freely browse information and choose the items they need. This contributes to the quicker information transfer and more convenient communication. So suppliers and demanders can interact with each other more actively than within the traditional business model.
In addition, compared with the traditional business model, the role played by individuals under the sharing mode is more diverse (VanAlstyne et al., 2016). This is mainly reflected in the P2P sharing business model. Within this model, individuals are enabled to participate in the market as micro-suppliers (Zervas et al., 2017). On these platforms, they can share their assets and make money from the offering. In contrast, within the traditional business model, individuals are only demand-side parties (Schor, 2016). Within the sharing economy model, consumers mainly obtain temporary access to the goods rather than permanent ownership (Botsman, 2013), while within the traditional business model, consumers get the ownership of the goods.
Sharing business models have more profit models than traditional business model. Within these business models, B2C sharing economy companies make money like traditional business do through providing goods or service, meanwhile P2P sharing economy companies can make money through platform usage fee, sales commission and even advertising fee (Olson & Kemp, 2015; Kosintceva, 2016).
competitiveness (Van Alstyne et al., 2016). They manage to stimulate consumers’ demand for their product, so that they can gain more profits (Kosintceva, 2016). The increase in demand will directly promote the production of new products, resulting in an expansion of the product market (Heinrichs, 2013). Instead, within sharing business model, community and users network are key resources (VanAlstyne et al., 2016). Sharing business model allows the exchange of idle assets, the use of which will not stimulate the production of new products but optimize the efficiency of these assets (Heinrichs, 2013; Schor, 2016).
2.5 Internationalization
Over the past few decades, many scholars have interpreted differently the term “internationalization”. The concept of internationalization is continuously enriched and improved. Johanson and Vahlne (1977) define internationalization as a step by step process of enterprise market expansion. Enterprises which internationalize conduct various forms of transnational business in the host country (Young et al., 1996). These business covers product exports, franchising, technology licensing, management contracts, turnkey project, foreign direct investment and so on (Andersen, 1993). Ruzzier et al. (2006) improve Johanson and Vahlne’s definition of internationalization as a gradual expansion of the enterprise from the domestic market to the international market. In the process of internationalization, the mobility of products and production factors continues to increase, and companies need to respond to the entire international market rather than a single country market (Robinson, 1984, Johanson & Vahlne, 1990). In general terms, the internationalization of enterprises is
a kind of expansion of enterprises' space (Ruzzier et al., 2006). During this process, the company’s investment and operation space expands from domestic context to international context (Coviello & Jones, 2005).
In the extant literature on internationalization, scholars have explored and discussed different characteristics of internationalization. Two main features of internationalization are speed of internationalization and location choice (Chetty et al., 2014).
The speed of internationalization has always been mentioned and studied in the literature on internationalization (Kiss & Danis, 2008). Vermeulen and Barkema (2002) are the first scholars to comprehensively study the speed of internationalization. Their definition of internationalization speed is the number of overseas subsidiaries of enterprises in a certain period of time, that is the average number of foreign subsidiaries established per year. The bigger the number, the higher the speed. The most commonly used definition in extant literature is put forward by Cieslik and Kaciak (2009), and it is the time it takes companies to conduct the first expansion in foreign markets from their foundation. However Acedo and Jones (2007) claimed that the internationalization speed is a multidimensional concept. Apart from the overall speed, it should also cover different aspects, for instance, the speed with which the company’s product lines and locations are diverse (Oviatt & McDougall, 2005). Accoridng to Chang (2007), the time it takes firms to replace export with foreign direct investment should be included in the concept as well
adopted. The speed defined by Cieslik and Kaciak is called internationalization speed 1, which is the time between a firm’s establishment and its first overseas expansion (Cieslik & Kaciak, 2009), and the internationalization speed defined by Vermeulen and Barkema is called internationalization speed 2, which is the average number of overseas subsidiaries established per year (Vermeulen & Barkema, 2002). Considering that the research object of this paper is a sharing economy companies. Most of them can expand in different countries through the Internet without setting up subsidiaries in the host country. So this definition will be revised to the average number of foreign countries entered by the company per year. In this paper, both internationalization speed 1 and internationalization speed 2 will be measured and studied.
According to Johanson and Vahlne (1990), also location choice should be taken into consideration when researching internationalization. There is a large amount of literature studying the location choice of MNEs’ overseas expansion, and the factors that influence their decisions. Understood from its literal meaning, this topic refers to the choice of target foreign markets firms want to enter. In depth, the concept of location describes where and why companies decide to expand and operate in certain areas (Porter, 2001; Alca´cer & Chung, 2007). In the early days, scholars always study the location choice of company at the country level (Andersson, 2000; Gripsrud & Benito, 2005). When considering which market to enter, for example developed countries or developing countries, the market’s location specific advantage (LSA) is an important factor affecting this decision. LSA means that some foreign countries
may have specific resources and assets that are not available in other countries and therefore have advantages vis- -vis other countries (Dunning, 1998). For example, in developed countries, there are more highly educated people and well-developed infrastructure. In contrast, the prices of labor and of natural resources in developing countries are relatively low.
The Uppsala model (Johanson & Vahlne, 1977) suggests that the location choice is a stepwise cultural learning process, during which companies gradually gain experience and learn by doing. Lack of knowledge and resource are biggest obstacles for companies to internationalize (Gao, 2008). When making the location choice decision, home and host country distance is a vital influencing factor. According to Ghemawat (2001), distance is extent of differences between country pairs. This multidimensional concept includes not only the geographical distance but also cultural, administrative and economic distance. According to the Uppsala model (Johanson & Vahlne, 1977), firms initially expand in geographically, institutionally and culturally proximate countries that are relative familiar. After accumulating experience, firms expands into more distant country markets which are less familiar.
With the development and deepening of research, scholars have noticed that in some cases the company may choose to enter several specific cities of the host country instead of entering the entire host country. These cities are usually metropolises with developed economy, high income level and good infrastructure. For example, when Uber first entered the Chinese market, it only provided services in nine cities including Shanghai, Beijing, Guangzhou, Hangzhou, Chengdu and so on.
This phenomenon has led scholars to study the location choice of companies from the city level.
Some scholars explored the impact of cities on the global economy and then proposed the concept of “global cities”, which reflects the global economic function of the city (Friedmann, 1986; Sassen, 1991). Global cities are strategic sites for global management and control in the world economy system (Sassen 1991, 2012; Choi et al., 2006). According to Goerzen et al (2013), global cities are always cultural, political, economic, and social centers of the country. Three key attributes of global cities are high degree of centrality, cosmopolitan environment and global interconnectedness, and these distinctive characteristics can help companies overcome their liability of foreignness (LOF) when doing business abroad (Goerzen et al., 2013). As important channels for resource flows, global cities provide developed physical (e.g., airports) and informational (e.g., the internet and mass media) infrastructures for the global economy (Sassen, 1991, 2012; Goerzen et al., 2013). London, New York and Tokyo are identified as prominent examples of global cities (Choi et al., 2006).
2.6 Internationalization by firms from emerging economies
Although most of the MNEs comes from developed countries, the overseas expansion of emerging country companies has increased exponentially in recent decades. Competition in international markets is fierce, and companies from emerging countries lack the strength to compete fully with MNEs from developed countries (Wright et al., 2005).
emerging economies is low. These companies usually choose to conduct oversea expansion after they have grown in their home markets because they lack the capacity to operate in international markets and the resources necessary for quick and large-scale internationalization (Luo & Tung, 2007). The ability of these companies to fight against risks is low and early internationalization often threatens their survival chances (Sapienza et al., 2006). It usually takes companies from emerging economies long time to enter foreign markets after their foundations (Sharma, 2015).
When talking about location choice, MNEs from emerging countries have a completely different approach than those from developed countries. Sirkin et al (2008) posits that most of the emerging countries’ MNEs are more willing to enter other emerging countries, because the host country has a similar situation with the home country, so that these companies can take advantage of their existing capabilities to operate in host countries. Compared with local companies in developed countries, these companies’ brand image is relatively weak and their products are considered to be inferior in quality and technology (Thanasuta et al., 2009). So they are at a disadvantage to local competitors when operating in the developed countries, which may bring more risk than in other emerging countries. Although in the early stages of overseas expanison, MNEs from emerging countries will choose to enter other developing countries. In the process of expansion, these enterprises gradually acquire the necessary experience and knowledge through international business (Bartlet & Ghoshal, 2000) and will end up investing in developed country markets to enjoy better access to strategic assets and develop ownership advantages (Li, 2003; Lee &
Slater, 2007).
2.7 Internationalization by digital MNCs
Digital companies are also known as e-business, Internet firms, and the products they provide often contain a certain amount of digital elements (Hull et al., 2007). The expression ‘digital firm’ (Mahnke & Venzin, 2003) refers to a kind of companies which conduct business and enable the business relationships among employees, suppliers, customers and the stakeholders with the help of digital networks. Scholars have argued that the differences between such companies and traditional companies make them have a different internationalization process from traditional companies (Zhang et al., 2015; Brouthers et al., 2016; Wentrup, 2016).
Wentrup (2016) states that the model of digital companies expanding in foreign markets can be divided into online entry and offline entry. Online entry refers to the fact that the company only provides product and service through the online market. Offline entry means that the company will establish subsidiaries in the target countries and use these subsidiaries to conduct overseas operations. In the process of internationalization, digital companies pay more attention to the control of branding, technology, and consumer knowledge (Strandberg, 2016).
Compared with traditional companies, digital companies are more willing to enter foreign markets at a fast pace and bear the risks of fast internationalization (Mahnke & Venzin, 2003). Because compared to the risks brought about by fast internationalization, they are more worried about the losses caused by the failure to occupy foreign markets (Zhang et al., 2015). Some kinds of digital products, such as
mobile APPs, websites, video games and digital platforms, are available and easily purchased on the internet. So digital companies which develop and provide such kinds of products may have lower barriers to entering foreign markets and are less likely to be subject to host country import and investment restrictions (Brouthers et al., 2016). This reduces the difficulty of and simplifies the preparation for overseas expansion, thus increase the internationalization speed of digital companies (Yamin & Sinkovics, 2006). However, as mentioned above, it’s necessary for digital companies to build business relationship with employees, suppliers, customers and the stakeholders. When internationalizing, compared with traditional companies, digital companies are more susceptible to liability of outsidership (Johanson & Vahlne, 2009). It means the company will fail to gain the knowledge and thereby opportunities in the host country market, because of the outsidership from the local business network (Karimibabak & Sinclair, 2011). When internationalizing, companies need to achieve an insidership in the local business network to make the internationalization successful (Johanson & Vahlne, 2009). According to Coviello (2006), insidership in networks is always developed before entering a foreign country, so it would take digital companies lots of time to create network in the host country before a foreign entry. This will reduce the internationalization speed of digital companies.
In terms of location choice, digital firms are more likely to enter developed countries (Brouthers et al., 2016). In developed countries, digital infrastructure is well developed, electronic equipment like laptops, smart phones are more prevalent. This factors contribute to construct a good operating environment for digital companies.
3. Theoretical framework
As mentioned in the previous section, in the recent decades, the sharing economy has shown explosive growth and has become a very popular socio-economic phenomenon. By combining various definitions of sharing economy from different scholars (Hamari et al., 2016; Frenken& Schor, 2017; Acquier et al., 2017), in this paper the sharing economy is defined as the market where individuals or organizations exchange or share asset through digital platforms. From this definition, assets are no need to be underutilized and online platforms are an important tool for the implementation of these sharing and exchange behaviors (Botsman, 2013, Hamari et al., 2016, Schor, 2016).
In the past few decades, the sharing economy has developed rapidly, and it has covered more and more industries. (Owyang, 2016). In the sharing economy, companies can adopt the B2C sharing business model or the P2P sharing business models (Schor, 2016). Different business model choices correspond to different value propositions (Kosintceva, 2016). Within the B2C sharing business models, sharing economy firms supply products and services through their platforms and make money from renting the asset (Schor, 2016). Only firms act as suppliers and individuals are on the demand side. On the other hand, firms adopting P2P sharing business models only offer the online platform to build an online market for individual suppliers and demanders (Cannon & Summers, 2014). These companies can directly charge users or make money from external parties (Olson & Kemp, 2015; Kosintceva, 2016). Under this business model, besides firms which supply the platform, individual also
participate in the transaction as suppliers, by providing idle assets.
Unlike the sharing economy business model, under traditional business models, activities performed by companies are linear. They invest resources at the beginning of the value chain and harvest products at the end of the value chain (VanAlstyne et al., 2016). There are a lot of differences between a traditional business model and sharing business models. Use of digital platforms is the most salient feature that distinguishes these two kinds of business models. Both B2C sharing companies and P2P sharing companies consider digital platforms as significant tools and channels to carry out their business (Heinrichs, 2013; Schor, 2016). This difference also results in difference in other aspects, such as different level of interaction between suppliers and demanders, and the roles that individuals can play in the transaction. For instance, within the P2P sharing business models, individuals can be both suppliers and demanders (Zervas et al., 2017). In addition, sharing business model has more profit models than traditional business model. Furthermore, traditional business values brand and product, while sharing business model pays more attention to community and users network (VanAlstyneet al., 2016).
In the past decade, with the rapid spread and development of the sharing economy, many sharing economy companies have sprung up (Andersson, 2000). After the success in their home countries, these sharing economy companies start to internationalize (Kosintceva, 2016). Internationalization is the process by which a company’s operating space expands from home to foreign countries (Johanson &
Vahlne, 1977). During the process, firms conducts multinational business in foreign markets (Andersen, 1993). Two important components of the internationalization are speed of internationalization and location choice (Johanson & Vahlne, 1990; Chetty et al., 2014).
Internationalization speed can be both the time between the firm’s foundation and its first foreign expansion, and the average number of foreign countries entered per year (Vermeulen & Barkema, 2002; Cieslik & Kaciak, 2009). Location choice can be understood literally as the choice of locations firms plan to enter. The location can be at country level, developed countries and developing countries show different attractiveness to companies based on their location specific advantages (Dunning, 1998). According to Johanson and Vahlne (1977), companies firstly expand in countries which are close and choose to enter more distant countries when gaining experience. Sometimes, the location can also be at city level. Compared with non-global cities, global cities have stronger economic functions, richer resources and better infrastructures, and it’s easier for MNEs to overcome their LOF if they do business in global cities (Sassen, 1991, 2012; Goerzen et al., 2013).
Companies from emerging countries present some unique features in their internationalization. Due to the lack of capacity and resources, companies from emerging economies tend to internationalize at a low speed (Luo & Tung, 2007). When it comes to the countries to expand, compared with companies from developed countries, companies from emerging countries are more willing to choose other
emerging economies (Sirkin et al., 2008).
In addition to the home country of the company, the type of company may also play a role in shaping firm’s internationalization patterns. Some scholars have studied the specific internationalization patterns of digital companies. The results show that the difference between digital companies and traditional companies has an impact on their internationalization. Compared with traditional companies, digital can bear risks of fast internationalization because they are more worried about the failure to occupy foreign markets caused by late entry (Zhang et al., 2015). So digital companies are more willing to enter foreign markets faster than traditional companies (Mahnke & Venzin, 2003). In addition, many digital companies may have lower barriers to entering foreign markets (Brouthers et al., 2016). This reduces the difficulty of overseas expansion, thus increase the internationalization speed of digital companies (Yamin & Sinkovics, 2006). On the other hand, digital companies need to build business relationship with employees, suppliers, customers and the stakeholders (Mahnke & Venzin, 2003). So compare with traditional companies, they suffer more from the liability of outsidership when internationalizing (Johanson & Vahlne, 2009). In order to overcome the liability of outsidership, digital companies need to spend lots of time developing an insidership in the business network of the host country before entry (Coviello, 2006). This would reduce the internationalization speed of digital companies. In terms of location choice, unlike traditional companies which choose to initially enter close countries, digital firms prefer to enter developed countries regardless of the distance (Brouthers et al., 2015).
As mentioned above, the differences between digital companies and traditional companies lead to their different internationalization patterns. However, the literature on emerging countries’ MNEs has only researched MNEs which are traditional companies and underexplored digital MNEs from emerging countries. The difference between the internationalization of these two different kinds of companies is neglected. In addition, the literature on digital MNEs only studies digital companies from developed countries and has underexplored digital MNEs from emerging countries. More specifically, there is very limited research on the internationalization of MNEs adopting a sharing economy business models from emerging countries. Furthermore, the difference between B2C sharing business model and P2P business model may also affect their internationalization patterns. Under B2C sharing business model, companies own the goods shared and they provide them on their digital platforms (Kosintceva, 2016). When internationalizing, B2C sharing need to prepare goods and make them physically present in the host country (Schor, 2016). These activities need additional time and money, thus reduce the internationalization speed of B2C sharing economy companies. On the hand, P2P sharing economy companies don’t need to provide goods and all goods are offered by individuals (Cannon & Summers, 2014). So P2P sharing economy companies need to build relationship with both demanders and individual suppliers in the host country when expanding. This may reduce the internationalization speed of P2P sharing economy companies. However, few literature studies the difference between the internationalization of B2C companies and that of P2P sharing economy companies.
Based on the gaps in the research areas mentioned above, this paper aims to answer the following question:
How do sharing economy companies from emerging countries internationalize? This question can be divided into three sub questions:
1. What is the internationalization speed of sharing economy companies from emerging countries, compared to traditional companies from emerging countries?
2. What is the difference between the internationalization speed of P2P sharing economy companies from emerging countries and that of B2C sharing economy companies from emerging countries?
3. What are the location choices of sharing economy companies from emerging countries?
On one hand, companies from emerging economies lack knowledge and resources for internationalization and they are afraid of the risks brought about by quick internationalization (Luo & Tung, 2007). So these companies usually internationalize slowly (Sapienza, 2006). On the other hand, digital companies are willing to withstand the high risks brought about by internationalization and are eager to enter other countries fast to seize the market (Mahnke & Venzin, 2003; Zhang et al., 2015). So it’s likely that digital companies from emerging countries tend to internationalize faster than traditional companies from emerging countries. As a kind
of digital company, sharing economy companies are expected to have similar characteristics of internationalization. Within the sharing economy model, P2P sharing economy companies use a digital platform to serve customers from different countries (Cannon & Summers, 2014), so they don’t need to spend time looking for agents or establishing branches when expanding in foreign countries. Since most of the shared goods are idle items which are used repeatedly (Botsman & Rogers, 2010), it may take sharing economy companies less time to prepare product than traditional companies. Under sharing business models, it’s important for sharing economy companies to create users network (VanAlstyne et al., 2016). As mentioned before, digital companies tend to internationalize faster than traditional companies, because they want to seize the markets in foreign countries through early entry (Mahnke & Venzin, 2003). Representing a type of digital companies, it’s likely that sharing economy companies may also internationalize faster than traditional companies to build users network in the host country as soon as possible. Finally, the novelty of the sharing economy itself, as well as the economic, social, and ecological effects it creates (Cannon & Summers, 2014) make consumers more interested in sharing economy companies. These interests and favorable feelings are expected to become a booster in sharing economy companies’ internationalization.
Proposition 1: The internationalization speed 1 of sharing economy companies from emerging countries is higher than that of traditional companies from emerging countries.
Based on the market structure, sharing business models can be divided into business-to-consumer (B2C) sharing business model and peer-to-peer (P2P) sharing business model (Schor, 2016). B2C sharing economies companies not only provide the digital platform but also own the physical goods and need to offer them to consumers on the platform (Kosintceva, 2016). When internationalizing, B2C sharing economy companies need to prepare and transport the goods. Sometimes, these B2C companies have to specifically improve products to cater to the tastes of consumers in different countries. For example, when OFO, a China’s B2C bike sharing company, entered the European market, it adjusted the size of bikes according to the size of the Europeans. These activities often consume a lot of time and money. In contrast, P2P sharing economy companies only provide the online platform to match the demand side and the supply side (Cannon & Summers, 2014). All goods on the platform are provided by individuals and consumers can choose their favorite products based on their own preferences (Heinrichs, 2013). According to Wentrup (2016), digital companies can use the online mode to enter foreign markets. It’s applied to P2P sharing economy companies. When expanding in foreign countries, P2P sharing economy companies use the Internet to provide service in different countries without being physically present in foreign countries. So P2P sharing economy companies do not need to prepare and provide physical goods in host countries when internationalizing. This reduces the logistics costs incurred in the internationalization of P2P sharing economy companies. In addition, digital platforms are less likely to be subject to host country import and investment restrictions, thereby lowering
company’s barriers to entering foreign markets (Brouthers et al., 2016). All these factors reduce the difficulty of and simplifies the preparation for overseas expansion of P2P sharing economy companies (Yamin & Sinkovics, 2006).
Proposition 2: The internationalization speed 1 of P2P sharing economy companies from emerging countries is higher than that of B2C sharing economy companies from emerging countries.
Proposition 3: The internationalization speed 2 of P2P sharing economy companies from emerging countries is higher than that of B2C sharing economy companies from emerging countries.
Location choice is an important component of internationalization (Johanson & Vahlne, 1990). When choosing the target country to enter, the distance between home country and host country is an important influencing factor. According to the Uppsala model (Johanson & Vahlne, 1977), companies tend to firstly enter close countries. Based on this theory, companies from emerging countries may firstly enter other emerging countries. Sirkin et al (2008) states that most of the emerging countries’ MNEs are more willing to choose other emerging countries to expand, because the host country has a situation similar to the parent country, so these companies can take advantage of their capabilities to operate in these countries. However, it’s likely that sharing economy companies from emerging countries may have different location choice from traditional companies from emerging countries. Compared with developing countries, electronic equipment and internet are more widespread in
developed countries. As mentioned before, online platforms are important channels within the sharing business models (Brouthers et al., 2016). In developed countries, it’s likely that people may have more access to these platforms. In addition, community and users network are vital resource for sharing economy companies (Van Alstyne et al., 2016). Developed digital infrastructure and frequent contact with the network are expected to help sharing economy companies quickly build the online community and users network.
Proposition 4: Sharing economy companies from emerging countries are more likely to enter developed countries than non-developed countries.
Similarly, global cities, which play important roles in the management and control of global economy, usually have higher economic level and richer resource flows (Sassen 1991, 2012; Choi et al., 2006). So it’s likely that people in global cities may have more idle assets to provide or share with others. This is conducive to the business of P2P sharing economy companies, because individuals are suppliers within this sharing business model (Heinrichs, 2013; Belk, 2014). Global cities provide informational infrastructures for global economy, so the informational infrastructures such as internet and mass media in global cities are developed (Sassen, 1991, 2012; Goerzen et al., 2013). As online platforms are core of sharing economy models, good digital infrastructures in global cities offer people more channels to know and use online platforms provided by sharing economy companies. Last but not least, doing business in global cities may suffer from less LOF than in non-global cities, because
of the distinctive features of global cities (Goerzen et al., 2013). This is really attractive to emerging countries’ companies which have low anti-risk ability (Sapienza, 2006).
Proposition 5: Sharing economy companies from emerging countries are more likely to enter global cities than non-global cities.
When internationalizing, P2P sharing economy companies only need to provide digital platforms in host countries (Cannon & Summers, 2014). Digital platforms are easily accessible through the internet and not limited by time and space (Brouthers et al., 2016). So P2P sharing economy companies can use the online entry mode to enter the host country (Wentrup, 2016), which means they only use the Internet to provide service in the whole host country. It’s likely that they can enter the entire host country easily through the Internet.
Proposition 6: P2P sharing economy companies from emerging countries prefer to enter the entire host country when internationalizing.
In the contrast, B2C sharing economy companies not only provide platforms but also offer assets (Kosintceva, 2016). So they need to provide physic goods in host countries. Entering the entire host country may cost B2C sharing economy companies a lot of money, as they need to prepare and transport these assets. If they fail, they are expected to suffer greater losses than P2P sharing economy companies. Furthermore, compared with digital platforms, physic goods are more likely to be subject to host country import restrictions (Brouthers et al., 2016). For example, when OFO intended
to enter Amsterdam, it was resisted by the local government because the government believed that the disorderly parking of bicycles would increase the burden of urban management. So it’s likely that B2C sharing economy companies may enter particular cities of the host country when expanding abroad.
Proposition 7: B2C sharing economy companies from emerging countries prefer to enter particular cities of the host country when internationalizing.
4. Methodology
4.1 Research approach
In this paper, a qualitative research method was selected to conduct the study. The qualitative method can help researchers to understand and interpret certain social phenomena. Through qualitative research, researchers can study selected topics in depth and in detail (Patton, 1990). Several factors led to the choice of this underlying methodology. First, the research question determines this method. The main research question of this thesis is: “How do sharing economy companies from emerging countries internationalize?”. In this thesis, this topic was studied and explored in depth concerning two main characteristics of internationalization: the speed of internationalization and location choice. The qualitative method enabled this paper to form deeper insights into each characteristic by collecting and analyzing data of emerging country’s sharing economy companies. The second is absence of research and literature on the topic studied in this thesis. Previous studies only study the internationalization of emerging country’s companies that adopt traditional business
models or that of digital companies from developed countries. The internationalization of emerging countries’ sharing economy companies is an underexplored topic which calls for more research and literature. According to Yin (2003), the qualitative method is suitable for exploring novel fields of research more fully. Through this research method, we can form an in-depth understanding and draw conclusions about the internationalization of emerging country’s sharing economy companies. Last, most sharing economy companies are unwilling to disclose data or information about their business activities, so it is difficult to collect enough data to conduct quantitative research.
The case study was considered to be the appropriate research approach in this thesis. This approach was chosen for the following reasons. First, according to Yin(2003), a case study design should be selected if the question to be answered is a “why” and “how” question. As mentioned before, the research question is: “How do sharing economy companies from emerging countries internationalize?” It’s clearly a “how” question. Second, Yin (2009) also claimed that the case study should be considered when researchers want to investigate a phenomenon in real life. The internationalization of emerging country’s sharing economy companies is such a phenomenon. In addition, Baxter & Jack (2008) stated that the case study is a good approach when the behavior of the people involved in the study cannot be manipulated. The pattern of company’s internationalization depends on the decisions made by the company’s top management, whose behaviors cannot be manipulated.
According to Yin (2003), case studies can be divided into two different types: single case studies and multiple-case studies. The multiple-case study research design was used in this paper, because this study will analyze several different cases. According to Gustafsson (2017), if a study includes more than one single case, the multiple case study should be used. Furthermore, in this study, both the literal replication and theoretical replications are considered (Gustafsson, 2017). As sharing economy companies, there are similarities between cases. On the other hand, B2C sharing economy companies may have different internationalization pattern from P2P ones. Through a multiple-case study, researchers are able to explore the similarities and differences between cases (Baxter & Jack, 2008). This helps to generate a more comprehensive understanding of the research topic.
4.2 Case selection
In line with the purpose of this study, only those emerging country’s sharing economy companies which have internationalized were considered in the study. So it was a vital task to judge whether the company is international or not. As introduced in the previous part, as a kind of digital companies, P2P sharing economy companies can use the online mode to enter the foreign markets. Because P2P sharing economy companies only need to provide the digital platform, these companies can use the internet to offer their platforms online in different countries. This applies to many P2P sharing economy companies, as they do business abroad without being physically present abroad. Based on this, these companies are considered to be international as long as they provide services in foreign markets, and do not necessarily establish
subsidiaries abroad.
In this thesis, the international expansion of Chinese sharing economy firms is used as the setting for this study and all cases were sharing economy companies from China. Two main reasons have driven the focus on sharing economy companies from China. First, China is the world’s largest emerging country (Jain, 2006), so it has the typical characteristics of emerging market countries: middle and low income per capita, underdeveloped capital market and low degree of industrialization (Luo et al., 2010). According to this, it is likely that the findings of this study can be applied across emerging countries. In addition, the phenomenon of sharing economy company’s internationalization is quite popular and prominent in China. Although China’s sharing economy has not grown for a long time, it has taken the lead in the world in terms of market size and international influence. 2017 was the year when China's sharing economy was booming. The industry scale reached 4920 billion yuan, and the total investment on the industry was 216 billion yuan (China State Information Center, 2018). A large number of sharing economy companies sprung up and some of them internationalize immediately. So we have a set of various samples to choose, which is conducive to the reliability of the study.
In order to make findings more general and applicable, sharing economy companies engaged different industries were analyzed. Owyang’s honeycomb model (2015) shows 16 different industries covered by sharing economy and classify a set of sharing economy companies based on their industries. However, considering the
specific situation of sharing economy companies in China, it is not possible to select cases from all these 16 industries. In light of the Annual Report on China's Sharing Economy Development (ARCSED, 2018) which is published by the National Information Center, at the current stage, transportation, finance and accommodation are major areas of China's sharing economy. Chinese sharing economy companies have emerged the most in these three fields. Few companies choose to operate in other industries, let alone internationalization. So China’s sharing economy companies from these three sectors were selected.
When deciding which companies to choose, I used the ARCSED 2018 as reference again. The report lists a series of Chinese sharing economy companies and introduced them as representatives of their respective fields. These companies occupy the highest market share in their industry. For example, Mobike and OFO, respectively hold 56.56% market share and 29.77% market share in China's bike sharing market. Some of them are even ranked in the list of the World’s Unicorn Companies, such as Didi, OFO, Mobike, Tujia and Lufax. Excluding companies that have not yet internationalized, 9 international Chinese sharing economy companies from three arenas were chosen as the research targets. These companies are all mentioned in the ARCSED 2018. They desire to enter foreign markets and have conducted several trials. This is consistent with the object of my study. The table 1 shows some background information about these companies.
model establishment
Transportation Didi Car sharing P2P 2012
YiDao Car sharing B2C 2010
OFO Bike sharing B2C 2014
Mobike Bike sharing B2C 2015
Xiaolan Bike sharing B2C 2016
Accommodation TuJia House sharing P2P 2012
Xiaozhu House sharing P2P 2012
Finance Lufax P2P online loan P2P 2011
Yirendai P2P online loan P2P 2012
Table 1: Selected case of Chinese sharing economy companies
I also selected some Chinese tradition companies so that I could make a comparison between the speed of sharing economy companies and that of traditional companies when studying the internationalization speed. I filtered out all the Chinese companies in the Fortune 500 (2017) and eliminated those state-owned enterprises and central enterprises. After that, 22 companies were left. The Fortune 500 which is annually published by Fortune magazine has always been the most famous and authoritative ranking list of companies from all countries. The reason why state-owned enterprises and central enterprises were excluded is that state-owned enterprises and central enterprises can receive funds and support from the country and the government, that may affect their internationalization. All sharing economy companies selected are private enterprises. Choosing private traditional companies to
compare with them can make the results of the comparison more relevant. In addition to the Fortune 500, the China's Top 100 Multinational Companies (2017) was used as reference as well. This list which was published by the Chinese Association of Entrepreneurs ranked Chinese MNEs according to their overseas assets and overseas income. I removed those of the 22 companies that are not in the list, because companies in the list were considered to have stronger international strength and intentions. Finally, 17 Chinese international companies were selected. The table 2 shows some information about them.
Company Year of establishment
1 ALIBABA GROUP HOLDING 1999
2 ANBANG INSURANCE GROUP 2004
3 CEFC CHINA ENERGY 2002
4 CHINA EVERGRANDE GROUP 1997
5 CHINA VANKE 1984
6 COUNTRY GARDEN HOLDINGS 1992
7 DALIAN WANDA GROUP 1988
8 HENGLI GROUP 1994
9 HNA GROUP 1993
10 HUAWEI INVESTMENT & HOLDING 1987
11 JD.COM 1998
13 LENOVO GROUP 1984
14 MIDEA GROUP 1968
15 SHANDONG WEIQIAO PIONEERING
GROUP
1998
16 TENCENT HOLDINGS 1998
17 ZHEJIANG GEELY HOLDING GROUP 1986
Table 2: Selected Chinese traditional companies
4.3 Data collection
Depending on how the data is collected, data can be divided into two types: primary data and secondary data. According to Lewis (2003), primary data refers to data directly obtained by investigators through interviews, questionnaires, and observations, while second-hand data refers to those that have been collected by others. In this thesis, the data used is secondary data which was gathered from companies’ homepages, news website, social networks and so on. First, the companies’ websites were selected as the source of data. Information on the company’s website is directly released by the company itself. This can contribute to the accuracy and reliability of the data collected. When data collected from the company’s website was not sufficient enough, news websites such as Xinhuanet, Chinanews and Ifeng served as another source of information. If the information is still insufficient, I looked into it from other sources, such as social networks and database.
The above section describes where the data was collected from. The following part will introduce which data was collected. Firstly, some background information
