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 entrystrategies of the multinational banks (MNBs) investing in the People's Republic ofChina. The research is driven by an interest in understanding the strategic behaviour ofthe MNBs as they are presented with huge investment opportunities but potentiallyhigher risks caused by the market and regulatory structures. The study explains thedifferences in entry strategies of the MNBs and explores the causes of convergence intheir entry behaviours.The study is grounded in the eclectic theoretical paradigm based on which a conceptualframework is developed to incorporate three enabling factors for the competitiveadvantages of the MNB in the local market. The three enabling factors are also termedthe OLI framework with regard to ownership-specific advantages (0), location-specificadvantages (L) and internalisation-specific advantages (1). Correspondingly, three areasof literature are focused on in this research, namely, the resource-based view, theinstitutional theory and internalisation theory.The research design consists of in-depth case studies of ten multinational banks. Thecases are analysed based on strategic entry decisions in four dimensions, namely, theentry motive decision, the entry mode decision, the management control decision andthe marketing orientation decision. The cases are explored by means of semi-structuredinterviews of thirty-five senior bank managers based in the local branch in Beijingand/or Shanghai in China..Four patterns of strategic entry decision are identified through this research. Usingpattern-matching techniques of analysis, the research provides evidence to support tworesearch propositions; they are: i) the strategic entry decisions of the multinationalbanks in China are different. The differences are mainly attributed to the differences ofthe bank specific resources and the existing strategies of the parent banks; and ii) underthe coercively imposed regulatory conditions and the underdeveloped marketconditions, the strategic entry decisions of the multinational banks in China havetended to converge.This thesis contributes to existing theoretical, empirical and practice literature. Itintegrates multiple perspectives in applying the OLI framework. The developed OLIframework both explains and explores the formation of entry strategy of servicemultinationals. It emphasises the strategic behaviour of the MNB and provides insightsto the MNB regarding how to integrate strategic entry decisions with operation andbehaviour. It also provides the regulators with the way to assess the impact ofregulation on competition structure.