Morphing: The Linkage of Inward Private Equity and Outward Ventures

Abstract

Private equity is impacting global economies and competitive landscapes of multinational enterprises (MNEs). In this pioneer research, we first find an important new pattern of globally interfirm connections: the inward private equity investment likes to promote Chinese firms’ outward venture, or an inward-outward linkage. Under this inward-outward linkage, after received investment from private equity, Chinese emerging MNEs are likely to restructure board, rebuild the top management team, reconfiguring resource, reframe the industry structure and alter competitive dynamics, thus, modify their strategies in outward ventures, such as accelerating the internationalization speed, locating more outward ventures in developed economies, and engaging complex entry modes, especially cross-border M&As. We called the emergence of this new species of MNEs as a “morphing” metaphor, with in-depth seven case studies, including Lenovo, Zoomlion, Geely, Alibaba.com, Huawei, NVC lighting, and BYD.

Keywords: Private equity, Internationalization, Linkage strategy, organizational form