Does strategic coupling of TNCs affect their exit from host regions: Empirical analysis of the exit of Taiwanese enterprises from mainland China

TL;DR

This study examines why and how Taiwanese companies left mainland China between 2001 and 2021, finding that regional economic development and strategic relationships influenced their decisions.

Contribution

The study introduces a new framework analyzing how strategic coupling modes affect the exit behavior of Taiwanese enterprises from mainland China.

Findings

Inland regions with less developed economies had consistently high exit rates for Taiwanese enterprises.

The relationship between Taiwanese enterprises and mainland China evolved through three coupling modes: Captive, Cooperative, and Absorptive.

Post-pandemic, Taiwanese companies became more reliant on mainland China's market and suppliers.

Abstract

This study aims to investigate the temporal and spatial attributes of the exit of Taiwanese enterprises from mainland China between 2001 and 2021, by applying enterprise database data. Furthermore, the influence of strategic coupling on Taiwanese enterprises’ exit from mainland China was also investigated. The following are the key findings: The spatial distribution pattern of the exit rate of Taiwanese enterprises in mainland China varied at different phases. In contrast, the inland regions of the country’s central and western zones, which are characterized by comparatively less developed economies, maintained consistently high exit rates, whereas the eastern coastal region retained a low exit rate. Particularly, the relationship between Taiwanese enterprises and the invested areas changed from Captive coupling to Cooperative coupling and subsequently to Absorptive Coupling. Similarly, the coupling modes significantly influenced the exit of Taiwanese enterprises from mainland China. Moreover, the COVID-19 pandemic has contributed to the backward connection of Taiwanese corporations, which have become more reliant on the mainland China market and local suppliers than earlier. Taiwan-favoring policies and the regional innovation environment have consequently emerged as the primary locational advantages for retaining Taiwanese enterprises in the aftermath of the global financial crisis. Therefore, the aforementioned factors may help to reduce the Taiwanese enterprises’ exit from mainland China and possess valuable policy implications for Taiwan investment zones in mainland China.

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