Advances in Management and Applied Economics

Understanding the Linkage between Wage Growth and the Internationalization Strategies of Firms

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• Abstract

   

  This paper investigates the impacts of four internationalization strategies (ISs) adopted by firms on wages. In this research, we conclude four strategies a firm will adopt in developing an overseas market: (1) the “no international activity strategy”; (2) the “export strategy”; (3) the “foreign direct investment (FDI) strategy”; and (4) the export and FDI “combined strategy”. Based on the dataset from the Annual Surveys of Industrial Production (ASIP) and the List of Overseas Investment Firms (Institutions) from the Ministry of Commerce of China, this research finds that wages increase as the firms’ ISs evolve. And when the “combined strategy” is adopted, wages increase to the greatest extent. To understand this linkage between wage growth and the ISs, we conduct a mechanism test. The results demonstrate that the “the export strategy”, “the FDI strategy” and “the combined strategy” may increase wages by improving firms’ innovative capability and productivity of firms.

   

  JEL classification numbers: F16.

  Keywords: Export, Foreign Direct Investment, Internationalization Strategies, Firms Wage.