The Chinese economy is rapidly growing and is increasingly important in the modern global economy. To exploit this new market, foreign banks are eager to enter China to seek new business opportunities. Developing a successful market entry strategy is a key issue for foreign banks interested in expanding their business activities into China. China has unique socio-economic conditions and a cultural heritage quite different from Western society.
This research examines the impact of relational assets on the competitive advantage of foreign banks. More specifically, through the formation of strategic alliances between foreign banks and domestic Chinese banks.
Based on the literature of relational assets, a firm's competitive advantage should be enhanced by the investment of relational assets in its international business activities. Strategic alliances, one of the cooperation-based entry modes, will be the form of investment examined. The effectiveness of the investment will be measured by the abnormal returns after the announcement of the strategic alliance. The statistical results of this study support the assumption that foreign banks that form strategic alliances with domestic banks gain enhanced competitive advantage and create value.
Cultural Distance appears to play the critical role for success in the Chinese market. Foreign banks attempting to explore new business in China need not only to consider past practices but also need to accommodate China's unique cultural environment, which emphasizes interpersonal relationships much more than does Western society. Foreign banks, particularly the Western banks, need to invest in relational assets in order to enhance competitive advantage and exploit the opportunities of the Chinese market.
|Commitee:||Millson, Murray R., Wood, Dermod|
|School:||University of Maryland University College|
|Department:||Doctor of Management Program|
|School Location:||United States -- Maryland|
|Source:||DAI-A 73/07(E), Dissertation Abstracts International|
|Keywords:||Banking industry, China, Competitive advantage, Relational assets, Strategic alliances|
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