Session Ⅰ: Presenters

A reversal theory in internationalization : Case of Korean jewelry inside China



Purpose– This paper examines Korean jewelry manufacturers operating in China to assess the relationship between their perceptions of external risks and their intentions to relocate. We hypothesize that foreign firms finding risk in the current external environment are more likely to consider moving their facilities outside China. In particular, we explore whether firm performance and technological capability moderate the relationship between perceived external risk and relocation intentions. Design/methodology/approach – Korean jewelry manufacturers were among the first Korean firms entering China in the early 1990s to avoid Korea’s rising labor costs. After 20 years, they face similar external risks in China. We collected and analyzed 238 survey samples from Korean jewelry manufacturers operating in China to determine whether perceived external risks affect decisions to relocate. Logistic regression was used to examine the hypotheses. In addition to empirical method, we have included five case studies related to empirical results. Findings - Analysis results suggest that firms perceiving riskier managerial and competitive environments are more likely to have relocation intentions. Perceptions of risks from the governmental/political environment and macroeconomic environment have no significant relationship with relocation intentions. Also, firms’ performance and technological capability negatively moderate the relationship between perceptions of managerial competitive environment risks and relocation intentions. Originality/value – This study contributes to the literature on international business relocation strategies by examining perceptions of external risks that determine whether foreign manufacturing firms will relocate. In addition, the research sheds light on the transformation of Chinese economics from labor-intensive to capital, technological, and knowledge-intensive structures. By applying multi-methods, this research further elaborate empirical result with five case studies.


 Theory and hypotheses
 Case Studies
 Discussion and conclusions


  • Yong-Sik Hwang Associate Professor, School of Business, Sejong University
  • Dong Chen Associate Professor, College of Business, Loyola Marymount University


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