Fu, Wenhui; Nam, Youngho, Center of Innovation in Supply Chain and Service
For more than a decade, Chinese online game industry has developed and at present they attempt to catch bigger markets abroad, and to copy Chinese success experiences in other countries. In this context Chinese online game companies enter overseas markets with various purposes and in various entry modes. However, the internationalization strategies of online game industry are more diverse than those of traditional manufacturing or service industries due to the close interaction between its sub-industries: hard-service (game title development) and soft-service (game publishing) industries (Erramilli and Rao, 1990). This paper analyzes the relationship between motivation of internationalization and entry mode choice by investigating ten Chinese game firms’ overseas activities during 2001-2013.
Through internationalization, game firms want to exploit their superior abilities or to improve their weak points. According to the dynamic capability approach (Teece, 2007), the internationalization process of Chinese game firms can be divided into three stages: the overseas orientation stage, the value chain optimization stage and the global integration stage. At the overseas orientation stage when the sensing capability is a major driver of the internationalization, the least resource-committed modes such as licensing are preferred. At the value chain optimization stage when seizing opportunities are the main purpose, entry modes depend on the motivation of either exploiting core competence or augmenting weak assets, in either hard-service sector or soft-service sector. Control is the main entry evaluation criterion for exploitation and exploration of soft-service capability because soft-service is hard to be transferred to the third party. Knowledge sharing is the main entry evaluation criterion for exploration of hard-service capability while dissemination risk is the main determinant for exploitation of hard-service capability, because of transfer ability of hard-service. At the global integration stage, a variety of modes may coexist for the purposes of global value maximization, and thus the optimal entry mode choice may become a moot point.
This longitudinal multiple-case study tries to open a black box of game firms’ international strategy, which is not easily discerned by empirical cross-sectional study using overall industry samples. Findings of this study can be applied to other culture and creative industries especially where the integration between hard-service and soft-service factors constitute core competence of the industry value chain.
Wenhui Fu is PhD, Research Fellow at the Center of Innovation in Supply Chain and Service, China Europe International Business School
Youngho Nam is PhD, professor at the School fo Business Administration at KOOKMIN University in South Korea