Changes In Management Accounting Principles


Internationalization process has long been an interesting topic for scholars doing international business research (Barkema and Drogendijk, 2007), which has also been described by Welch & Luostarinen (1988) as the process that organizations get involved in the cross-border activities after realizing the importance and benefits of international operations. In addition, internationalization has also been described by the important models in international business as a gradual development process, which needs to take several different stages and comparatively long time (Melin, 1992).

Many Chinese enterprises are ambitious to go international; however, they need to meet some prerequisites before successfully transforming into multinational firms (Larcon, 2009 4). There have been numerous theoretical studies concerning the internationalization process of corporations, but are these studies applicable to Chinese firms being as latecomers? The researcher firstly makes a briefly review concerning what can be learned from previous studies and summarizes, and then studying specifically about the internationalization process of one Chinese high-tech company, Huawei technologies.

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With the rapid development of MNEs after the World Warâ…¡, western researchers have developed several different theories in terms of internationalization on the basis of distinct hypotheses, methods and research goals (Larcon, 2009 4). According to Blomstermo & Sharmam, (2003), these studies consist of monopolistic advantage theory (Hymer, 1976), oligopolistic reaction theory (Knickerbocker, 1973), internalization theory (Buckley and Casson, 1976) and stage models (Lam & White, 1999), including the product life cycle model (Vernon, 1966), Uppsala model (Johanson & Vahlne, 1977) and Innovation model (Bilkey & Tesar, 1977). Among which stage models have played a crucial role in the study of internationalization, which have been considered as the foundation of the follow-up studies.

According to Melin, (1992), they all regard internationalization development as a gradual process that needs to go through several sequential stages and a long period of time.

International Product Life Cycle Model (PLC)

The publication of product life cycle symbolizes the start of process-based studies (Blomstermo & Sharmam 2003). This can be regarded as the earliest internationalization model which was developed by Raymond Vernon in 1966 based on his study on the US firms. He wanted to combine an international trade theory on a country-based level with an international investment theory based on a firm perspective (Melin, 1992). As a result, Vernon (1966) founded that during the product life cycle, the production and competition environment of an innovative product keep changing, so in response to this phenomenon, US firms decided to make FDI, which roughly go through four stages: introduction, growth, maturity and decline. Specifically, companies are exporting when the product is newly introduced. With the growth of the product sales, they make overseas investments. When the product matures enough, gaining its popularity, firms start to enter developing markets. To conclude, with the development of products maturity, a short distance between the production sites and home-based headquarters, where making decisions and developing products, is not crucial as before (Melin, 1992). The PLC model has also been mentioned by other researchers (e.g., Young, Huang, & Mcdermott, 1996) as a means of acquiring technologies for firms from less developed states. This model, however, has also been criticized by Melin (1992) as more like an international trade theory instead of an internationalization model, since it mainly concentrates on the country level, even though the company level has been taken into account. Furthermore, McKiernan (1992) pointed out that this model is also not applicable to products with short lifetime, which happens frequently nowadays. In addition, Vernon (1979) cited in Melin (1992) mentioned that the model does not apply to products that are developed in enterprises which already have many overseas productions.

There are many empirical works that have utilized the PLC model to explain relative issues in internationalization. The research conducted by Tan (2002) showed that the product cycle theory can be adopted to explain the relationship between China's telecommunication manufacturing sector and FDI. According to the findings, in order to clarify the relations among government policy, domestic telecom vendors and FDI, the PLC model needs to be updated specifically in the case of China (Tan, 2002). Therefore, the investigator proposed a dynamic adding-and-downgrading model, which further enrich and expand the current product cycle theory and explain the interaction between the host developing countries and FDI investors (Tan, 2002). In the model (see Figure 1), the products have been classified into three categories in terms of their degree of certification: high (H), medium (M), and low (L), direct-sale is labeled as (DS), (IL) means local assembling and intermediate goods export and LP, local production (Tan, 2002). Research demonstrates that products belong to L category are dominated by LP, while products in the M category may be complemented by DS, but primarily governed by IL and LP (Tan, 2002). In addition, research shows that normally, FDI investors have to downgrade their products into the lower category due to the affects of policy or regulations in host countries (Tan, 2002). Moreover, Tan (2002) suggested that FDI could also generate trade instead of only destroying it.

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Figure 1 A dynamic adding-and-downgrading model.

Source: Tan, 2002

In addition, Almor et al (2006) also conducted the research concerning knowledge intensity and firm internationalization, based on the study of 75 Israeli firms, which are among Israel's 150 largest industrial firms and also take up more or less 80 percent of the country's exports (Dunderstanding & Bradstreet, 2000). They proposed the comparative important role of R&D, production (P) and marketing (M) in the three stages of the product cycle, so they expanded the current product cycle framework (see Figure 2), which includes their thoughts of the relationships between the characteristics of products during the three phases of cycle and "the internationalization patterns of R&D, P and M by firms engaged in cross-border interactions." It is suggested that in the introductory phase of the cycle, the primary competitive advantage of firm is its specific knowledge; while marketing is its successful determinant in the growth phase; production plays a key role during the maturity phase (Almor et al, 2006).

Figure 2: The Phase of the Product Life Cycle and the Determinants of Competitive Advantage.

Source: Almor et al, 2006

Uppsala Internationalization Process Model (U-model)

The Uppsala model has been applied widely and has the longest longevity. It has far-reaching influence on firms entering the international markets. This model treat internationalization as an evolutionary and learning process, which is also involving incremental changes (Lam & White, 1999). The incremental approach demonstrated in the model has been supported by mixed empirical studies (Coviello & McAuley, 1999; Hadjikhani, 1997; Lam & White, 1999; Vaatanen, et al, 2009; Young et al, 1996; Amdam, 2009). According to the research of Lam & White, (1999), which is conducted based on a longitudinal case study of PEC, the largest food firm in Taiwan. They found that the stage models ignore the specification of internal problems and barriers that managers need to confront with during the change process of organization (Lam & White, 1999). Thus, in order to fill this knowledge gap, they developed an adaptive choice model (see Figure 3) on the basis of Uppsala Model through the case study of PEC and stressed managerial difficulties concerning strategic, structural, and human resources changes during the internationalization process (Lam & White, 1999). They also emphasized strong interactions between these dilemmas, which mutually affect one another. Their propositions successfully facilitate companies' internationalization process (Lam & White, 1999).

Figure 3: The Stage and Adaptive Choice Model for Internationalization

Source: Lam & White, 1999

In the latest study of Malhotra & Hinings (2010), they asserted that since the incremental process is no longer a fresh topic, thus they proposed that different organizations take the different internationalization route (Malhotra & Hinings, 2010). They further identified that a company's organizational characteristics may influence its internationalization (Malhotra & Hinings, 2010). Therefore, their central argument is why and when researchers need to take organizational types into consideration (Malhotra & Hinings, 2010). They divided organizations into three types: the mass production organization; the disaggregated production organization; and the project-based organization, regarding their particular organizational features: the nature of principal assets, the nature of production activities and the centrality degree of customers in the service provision of companies (Malhotra & Hinings, 2010). Each of these features is corresponding to the three elements: the focus of entry, the degree of presence and the necessity of physical presence in the overseas market, which has an impact on the operation modes or modal forms. Consequently, these three types of organizations have distinct internationalization process (Malhotra & Hinings, 2010) (see Figure 4).

Figure 4: Organization type and the internationalization process: detailed model. FE, focus of entry; DP, degree of presence; PP, physical presence; MP, modal path.

Source: Malhotra & Hinings, 2010

Besides, the scholars investigated different internationalization paths based on the organizational diversity. According to Gronroos & Gummesson, (1986) cited by (Malhotra & Hinings, 2010), the mass production organizations, which are capital-intensive, so they emphasize efficiency and economy; ensuring things are done technically. They identified two modal paths for mass production organization with regard to whether there is need to have physical presence, namely, slow and steady path; leapfrogger path (Malhotra & Hinings, 2010). In addition, since market uncertainty has also been considered by Malhotra & Hinings, (2010) as an impact on the choice of paths by firms, they argued if the potential benefits of producing locally exceed the market risk; it is worthwhile for firms to have physical presence.

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Figure 5: Modal paths: (a) Slow and steady path; (b) & (c) leapfrogger paths.

Source: Malhotra & Hinings, 2010

There are, however, many studies challenge the incremental behavior that is suggested in the U-model (Loane & Bell, 2006; Luostarinen & Welch, 1990). Furthermore, the model has also been doubted by some researchers for being strict and narrow considering its description of incremental process pattern (Petersen & Pedersen, 1997). Johanson & Vahlne (1990) acknowledged that the U-model has been dominantly applied by companies which concentrate on market seeking. This view has also been proved by Petersen & Pedersen's (1997) finding, companies that show their motivations of seeking market normally follow incremental process, which is consistent with U-model. According to Johanson & Vahlne (1977), U-model illustrates the process of how enterprises enhancing their international commitments by increasingly acquiring knowledge of foreign markets. In other words, the model focuses on knowledge and learning. How the enterprises accumulate knowledge and how their investment decisions being influenced by these learning are the primary research problems (Johanson & Vahlne, 1977). Lee (1993) worked on Singaporean industrial MNEs, he particularly paid attention to how and why can FDI influence companies' non-financial performance. The study results powerfully supported there is a positive relationship between FDI and the home-based firm's technology (Lee, 1993). Lee (1993) explained that comparing with the domestic companies, MNEs was exposed to multiple stimuli, in other words, the diversified environments contributed to the learning opportunities of technology. In the work of Vaatanen et al, (2009), the author found that there is a close relationship between international operations and firms' performances. The Russian companies that operate internationally can gain significant more profit and the labor productivity is obviously higher than their indigenous counterparts (Vaatanen et al, 2009). The research was on the basis of MNEs from emerging country, Russia, which was conducted within the framework of the U-model. Therefore, it is suggested international operation can help firms acquire knowledge, which in turn can improve firms' performances. Forsgren (2002) identified that although learning is of significant importance in this model, however, it has not received adequate attention in the related research work. He further demonstrated his four findings in the research; firstly, even though Johanson & Vahlne (1977) acknowledged that knowledge can be attained, however, given the tacit nature and the key role of market knowledge in the internationalization process, firms have to count on their own operations. Companies need to be active to collect knowledge in a new environment so that firms can both realize gaining information of the market as well as establishing close contact with the market (Forsgren, 2002). Secondly, the knowledge of the market is reversely proportional to the perceived market risk. Specifically, the more familiar the company with the foreign market, the less perceived market uncertainties will be (Forsgren, 2002). Therefore, in this case, companies tend to make more foreign investments. Normally, companies only invest when the perceived risk is lower than their expectations (Johanson & Vahlne, 1977). Thirdly, knowledge is hard to be transmitted due to it heavily relies on individuals. Johanson & Vahlne (1990) mentioned that experiences of companies not only can create business opportunities, but also can contribute to the internationalization process of firms.

There are several empirical evidences have proven this pattern of evolution. Finnish industrial firms, U.K. small-scale companies and Japanese enterprises that invest in south-east Asia all have applied this model of internationalization (Welch & Luostarinen, 1988). In addition, the similar evolution pattern has been found in five Chinese state-owned companies (Young et al, 1996). Johanson & Vahlne (1977) also emphasized that, in the U-model, companies tend to enter markets that have minor distinctions with the home country regarding culture and language and so on, known as psychic distance. Firms prefer initially launching their internationalization through adjacent countries before moving on to other distant markets. Since in the beginning of internationalization, firms are lack of foreign experience, they need to accumulate experience from other companies and customers. Duysters et al (2009) based on their comparative study between Haier Group in China and India's Tata Group also acknowledged that companies from LDCs normally tend to firstly enter into other LDCs, because these countries have the same similarities in terms of the underdeveloped institutions and markets. According to Amdam (2009), who conducted research within the framework of the U-model on the internationalization history of Norwegian firms from 1945 to 1980 and tried to testify the "psychic distance" theory, showed that the concept of psychic distance should contain personal networks, both in the new economy and in the old economy. Therefore, firms enter foreign markets with gradually increasing psychic distance, so companies make investments in accordance with the so-called establishment chain (Johanson & Vahlne, 2009). Consequently, national culture has been found has a significant influence on the option of a firm's internationalization entry mode (Kogut and Singh, 1988). Since the knowledge of companies concerning foreign markets plays a key role in overcoming psychic distance to the markets (Melin, 1992) and the transmission of information between the company and the overseas market can be blocked by the perceived distance, therefore, companies tend to firstly enter neighboring countries, where, from the companies' own perspective, have lowest market risks, therefore they can be easily accepted (Melin, 1992). However, there are some researchers also point out that as the world becomes increasingly more integrated; the significance of psychic distance is decrease.

Even though the U-model mainly deals with learning and emphasize learning through own experience (Forsgren, 2002), however, studies in the past twenty years have some new findings concerning organizational learning and the consequences of companies' behavior. According to Barkema & Vermeulen (1998), there are several 'shortcuts' for firms to go to achieve knowledge, such as they can either make acquisitions or hiring qualified human resources. Some scholars found that enterprises do not necessarily have to have exactly the same experience as the other firms to attain the knowledge of them (Eriksson et al., 1997, Hansen, 1999). Huber (1991) also identified that instead of having to experience to gain the knowledge, organizations can do searches for information. While mimetic behavior, which has also been the research focus of many researchers, means firms learning by observing so that they behave similarly as the other companies (Haunschild & Miner, 1997). Learning has been mentioned by March (1991) as a means of improving performance as well as reducing alternatives. While the U-model primarily concentrated on experiential learning, so learning through the above means, such as acquisition, employing qualified people, learning by imitation or through searching for new information are all not part of the model so that they have little influence on the internationalization behavior of companies (Forsgren, 2002).

The internationalization process model is developed on the study of Swedish companies, which has also been supported by many other scholars (Cavusgil, 1980; Denis and Depelteau, 1985), demonstrating that this model has wide application, so it is not only applicable to countries that are exceedingly reliant on export. In addition, Young et al, (1996) also pointed out that, the internationalization process model could also be adopted to analyzing the emergence of emerging country MNEs. Nonetheless, the study result is mainly based on the researches of the early stage of internationalization specified in the model (Melin, 1992).

To sum up, both product life cycle model and internationalization process model have many shortcomings. The stage models concentrate on the progression of events, which identified that internationalization process occurs in an orderly sequence, each stage is the essential predecessor of the following stages (Van de Ven, 1992). Stubbart (1992) argued that stage models explain internationalization as a development process, which is determined by predesigned factors. However, he further mentioned that there are still many unpredictable environmental factors affect the results. In addition, stage models overlook the role of managers played in launching the strategic decision of internationalization (Melin, 1992). Moreover, since stage models are general, they ignored individual differences (Stubbart, 1992).

Innovation Internationalization Model (I-model)

The third model is the innovation model (I-model), which was built based upon the U-model and developed by Bilkey and Tesar (1977), emphasizing innovation in the internationalization process (Andersen, 1993). Internationalization can be divided into several stages in terms of different psychological States (Lam & White, 1999). In other words, the original source of internationalization decision is keep changing (McKiernan, 1992). Specifically, internationalization can both be initiated by external stimuli and internal environment, which have been identified by Bilkey and Tesar (1977) cited in (Blomstermo & Sharmam 2003) as two types of export motives, reactive motives and proactive motives. When internationalization is caused by the internal factors, i.e. pushing by some internal agents, this type can be classified as proactive motives. Alternatively, internationalization may be stimulated by the external environment, such as the preferential policy of local government, domestic competitive pressure, etc. these are reactive motives.

There are both commons and distinctions between U-model and I-model. With regard to the similarities, they both emphasize the importance of experiential knowledge in the internationalization process, which is not only the input but also the output of internationalization (Blomstermo & Sharma, 2003). Furthermore, they both acknowledge the incremental path-dependency in the development of experimental knowledge (Blomstermo & Sharma, 2003). While in terms of the differences between these two models, Andersen (1993) pointed out that they are two different approaches in the existing literature regarding the entry of foreign market and the internationalization process. Johanson & Vahlne (1977) more deeply emphasized the importance of experiential knowledge in reducing companies' risks and creating opportunities overseas. While Bilkey and Tesar (1977) treat internationalization as a gradual and stepwise development process and separate firm's development into several stages. In addition, Andersen (1993) also mentioned I-model is more suitable for small- and medium- sized companies, whereas U-model can be more widely applied and well developed than other process models.

Despite the development of the stage models, there are, however, still some critics about them. Forsgren (1989) argued that the stage models seldom treat acquisition as a means of internationalization. In addition, these models do not specifically indicate how exactly firms should internationalizing and in what stage of development a company should launch internationalization activities (Lam & White, 1999). Moreover, Oviatt & McDougall (1997) found that these stage models are only suitable for large enterprises. While Melin (1992) criticized these models are too linear to be falsified. Johanson and Vahlne (1990) also pointed out some limitations of internationalization process model. One is the model puts excessive emphasis on the early stage of internationalization; it has been criticized as too deterministic and partial (Reid, 1983). The criticism of being partial is from, since the Uppsala model primarily depends on one concept, experiential knowledge, to explain internationalization process; while other models regard experiential knowledge as only one aspect of several concepts (Blomstermo & Sharmam 2003). Besides, the internationalization process model does consider other factors about how they are handled. During the internationalization process, when firms have overseas operation, they need to deal with relations with their rivals and institutions in the host country and to overcome difficulties when they encounter (Blomstermo & Sharmam 2003). The criticisms of being too deterministic lie in that the incremental development of experiential knowledge and how it is demonstrated in the visible stage model (Blomstermo & Sharmam 2003). Researches show that companies do not always follow the model,beginning with export occasionally and ending up with overseas production (Hedlund & Kverneland, 1985). However, this view was opposed by Hadjikhani (1997), who argued that even though different industries have distinct visible market entry modes and change from time to time, the underlying learning process of experiential knowledge may stay the same.

The above stage models provide some alternative views on internationalization process comparing with the "eclectic paradigm", which was in a dominant place with regard to foreign investment theory (Melin, 1992).

The Eclectic Paradigm

The dominant theory on internationalization was 'eclectic paradigm' (Dunning, 1980, 1988), which is based on economic theory and explains three different advantages of companies involving in overseas production; they are ownership advantages, internalization advantages, and localization advantages. It also clarifies that due to economic efficiency, internationalization has been treated as one of few options of governance mechanisms by firms (Melin, 1992), the significant role of transaction cost in internationalizing process have also been identified in this learning stream (Buckley and Casson, 1976). Dunning (1980) also found the evidence that either minimizing cost or gaining ownership-specific advantage is the goal of internationalization. The location and organizational structure which have been chosen by companies can minimize their transaction costs (Williamson, 1979).

Scholars have also made comparisons between the eclectic paradigm and stage models, it turns out that the stage models still have advantages with regard to the organizational transformation (Lam & White, 1999). However, instead of concentrating on the internationalization process, the eclectic paradigm primarily focused on the existence of multinational companies (Buckley, 1990). While the internationalization process model, on the other hand, clarifies internationalization as a gradual process of development. Critics pointed out that eclectic paradigm lack a precise description of how to tackle the managerial difficulties that companies encounter during the globalizing. While stage models, however, regard MNEs as learners (Contractor, 2007). Furthermore, unlike eclectic paradigm is developed on the basis of economic theories, internationalization process model is based on behavioral theories, which points out internationalization is not an intentional plan based on rational analysis of companies, rather, it is primarily characterized by incremental learning via increasing market commitments (Melin, 1992). Nonetheless, McKiernan (1992) pointed out that due to companies need to make some adaptation before launching internationalization, the stage models, however, lack the exact related content, concerning adaptive challenges and managerial choices during the process of internationalization. Furthermore, the stage models do not make adequate effective suggestions to domestic firms that are in their transitions to international companies (Lam & White, 1999).

There are some empirical work by adopting eclectic paradigm theory analyze MNEs. A typical one is the research conducted by Li (2007), who proposed to modify and enhance the OLI model so that it can be utilized by MNEs from both developed countries as well as developing countries. He also conducted three longitudinal cases studies of Haier, TCL, and Lenovo in China, therefore suggested the integration of the classic OLI model and newly built LLL model, linkage-leverage-learning, can make better understanding of the internationalization MNEs no matter from developed or developing countries (Li, 2007). Recently, there are some criticisms about the limitations of OLI model, especially concerning the roles of internalization mode and ownership advantage (Li, 2007). Among them, Coviello, (2006) even doubted its validity with respect to the internationalization of MNEs. However, from the author's point of view, OLI model still has its value in the context of globalization, even though it has been challenged from certain perspectives. The study of Li, (2007) shows that OLI model is more internally-focused, while LLL is externally-focused. Therefore, by integrating the OLI model and LLL model, the researcher proposed a new comprehensive framework of MNE evolution, which consists of five "spatial" factors and three "temporal" process factors (Li, 2007). According to Li, (2003), "this integration is a holistic, dynamic and dialectical approach to MNE evolution".

Research Methodology

Research setting

Research methods have been similarly regarded by Ghauri and Gronhaug (2002) as a useful tool which can be used to find the solutions to the problems. The research is doing a longitudinal case study with only one company setting (Lam & white, 1999), that is, Huawei Corporation, which developed from an indigenously-owned firm in a developing country, China, to nowadays a competitive giant in the high-tech industry in the worldwide. Eisenhardt & Graebner (2007) pointed out that typically empirical research starts with the review of relative literature, recognizes the research gap and then suggests the research questions before dealing with the gap. Due to the existing theory pays relatively less attention to the subject of MNEs from developing countries (the gap). Under this circumstance, through a case study method, the explorative and explanatory phenomenon that is being studied can achieve an accurate and in-depth explanation (Sun, 2009).

Research approach

It is advocated that which type of method should be adopted is in accordance with the research problem and the research objectives (Ghauri and Gronhaug, 2002). So given the exploratory nature of this research topic and the discussed research question (Ghauri and Gronhaug, 2002), this project dominantly applies qualitative research method, that is, case study is chosen as the major methodology, specifically focusing on one Chinese high-tech corporation Huawei. Yin (1994) defined case studies as that some specific examples of a phenomenon have been described empirically, while the descriptions are typically on the basis of various sources of data. He further pointed out that when the research questions are about "how" and "why", case studies tend to be more preferable. For instance, Duysters, Jacob, Lemmens, and Jintian, (2009) used their study of Haier Group in China to demonstrate its internationalizing operation. Li (2007) by investigating three longitudinal cases suggested an integrated theory of MNE evolution. Moreover, when the researchers cannot have all the events under control or when they deal with a contemporary phenomenon in the real life background, in these cases, case studies are still preferred strategy (Yin, 1994). Eisenhardt (1989) also mentioned that the case study method is regarded as an effective tool to develop new theories and suggestions, although there are restrictions combined with the research method. According to Eisenhardt & Graebner (2007), case studies are being conducted based on the phenomenon occurs in the context that exists in the real life. Even though it is inevitable to be subjective through many theory-building approaches, the theory developed from case studies is unexpectedly objective. In addition, case study is especially applicable when there are too many factors need to be investigated within the phenomenon and investigations are hard to carry out from outside (Yin, 1994). Therefore, the case study method is not useful for all kinds of research; it is more suitable for developing and validating theory (Ghauri and Gronhaug, 2002). As a matter of fact, Bartunek et al, (2006) also acknowledged that case study research has been considered as most interesting study, which is a research strategy that can be used to develop theories, specifically, through applying one or more cases, researchers therefore can establish a theoretical framework or expand current theories from empirical evidence (Eisenhardt, 1989). The reason that case studies have been regarded as one of the best method of building theory lies in that this approach connects qualitative evidence with mainstream deductive research. In addition, developing theory from cases requires rich empirical data, therefore the theory builds in this way is likely to be interesting, precise, and testable (Eisenhardt & Graebner, 2007). Eisenhardt (1989) acknowledged that case study being used as a means of establishing theory is "replication logic". In other words, each case can be treated as a unit of analysis which serves as a different experiment. Thus, based on the objective of the research, to fill the gap of internationalization theory, qualitative case study method is a proper selection.

Typically, the qualitative and quantitative approaches are only different at the research procedure, in other words, the study quality is not affected by the research approach that is applied (Mohatta, 2009). McKiernan (1992) argued that due to much of the extant theory regarding internationalization was building on the basis of European companies, Huawei, being as a company from developing country, can be utilized as an ideal research object to re-study the internationalization process. In this scenario applying a qualitative approach is the optimal choice for this research.

Research strategy

According to Eisenhardt & Graebner (2007), when choosing cases, theoretical sampling is appropriate, which means the cases that are selected to do research, due to their own features, are especially suitable for demonstrating relationships among constructs. For single case study like this project, theoretical sampling is very obvious, Huawei technologies. Yin (1994) asserted cases that are chosen all lie in they are relative easily to be access to do research, "extreme exemplars", or "unusually revelatory". Therefore, Eisenhardt & Graebner (2007) outlined that doing a single case study is actually learning a special phenomenon under the very limited conditions. Selltiz et al (1976) cited in Ghauri and Gronhaug (2002) pointed out that case study method needs to do integrative research. In other words, the research object needs to be studied from diversified dimensions. So the researcher needs to collect enough information to describe and illustrate the unique characteristics of the case, while try to identify the common and different features in several cases and finally draw an integrative conclusion. According to Eisenhardt & Graebner (2007), the core concept of case study method is inductively establishing theory based on the study of cases. Since the theory is built by understanding the relationship of model construction based on the studies within and across cases, so it tends to be emergent (Eisenhardt & Graebner, 2007).

Research design

Research design plays a fundamental role in the study process. Since it can be seen as a conceptual framework, the needed information therefore can be collected through research design, which will in turn has an impact on the successive research activities (Ghauri and Gronhaug, 2002). According to Saunders et al (2009), there are three types of research purposes, exploratory, descriptive and explanatory. Specific to this project, the author is conducting an exploratory research. Since the purpose of exploratory study is to find out "what is happening; to seek new insights; to ask questions and to access phenomenon in a new light" (Robson, 2002). Therefore, it is suitable to explain one's perceptive of a problem. Due to the exploratory research has the flexible characteristic; researchers can keep changing and adding their new thoughts into the research problems with the prevailing situation (Ghauri and Gronhaug, 2002). Although it has been suggested that there are some common limitations correlated with field research, the case study method is still an effective tool to make propositions (Eisenhardt, 1989)

In addition, this research is doing a longitudinal case study; the particular advantage of longitudinal research has been clarified by Saunders et al (2009) as it has the capacity to learn the change and development. While Adams & Schvaneveldt (1991) outlined that as long as the scholars themselves are not affected by the research process itself, the variables that are being studied can be controlled by the researchers after them doing a period of observations on people and events.

Data collection

Ghauri and Gronhaug (2002) argued that data collection in a case study is consist of several sources, for instance interviews, archival data, survey data, observations, reports as well as investigations are all major primary data sources. Among all these data sources, interviews are considered as the most efficient way to collect rich, empirical data (Eisenhardt & Graebner, 2007). Since comparing with survey, there may be some questions are left unanswered, interview, however, is more effective way of collecting data from this point of view (Daniels & Cannice, 2004). "Interviews with key informants located at important nodes of knowledge flows are an invaluable way of connecting with empirical reality" (Parkhe, 2004: xiii). Daniels & Cannice, (2004) noted that through interview the investigator can gather some more truthful data from the interviewees, which may contribute to some more in-depth investigations that may not have been anticipated. In this research, data were primarily collected by the means of interviews and secondary data analysis. Interviews were semi-structured. While secondary data of country level, China, and firm level, Huawei, were collected from diverse sources to complement the company data. Before interviewing informants in the Huawei's management level, secondary data were gathered from the company's annual reports, professional data bases, journals and magazines. Furthermore, interviews were chiefly conducted by the following guidelines: why did Huawei choose to go international; what are the modes of internationalization applied by Huawei; what strategies have been applied when entering a certain country; how did Huawei choose overseas destinations; what are the factors affected this decision; what problems have met and how the firm dealt with them in the process; how important roles of national support, large domestic market, prior international experience and product diversification have played in the internationalization process of Huawei; what the corporation's internationalization development recently etc. All interviews were chiefly done in Chinese due to the interviewees' preference; English was also utilized when it was necessary. In addition, interviews were primarily conducted by emails, with interview guideline and some further information of this research. Since the objective of the research is quite clear, so conducting semi-structured interviews was more effective than open-ended ones, which allows the research to be more focus. Furthermore, semi-structured interviews can provide guidance with regard to the research topic to the interviewees so that guarantees the information gathered from the respondents is real and relevant (Ghauri and Gronhaug , 2002).

In addition, due to bias have been identified in the previous research (Vaatanen et al, 2009) informants of two different management levels in Huawei, one senior executive and one junior executive, a project manager, were being interviewed in order to reduce bias as well as try to realize data triangulation (Yin, 1989).