Decentralized and concentrated investments in China and the performance of Taiwanese listed electronic companies

ABSTRACT

Ever since China surpassed Taiwan to become the largest exporter of electronic products, dependence between the two sides has deepened, which prompts Taiwanese companies to go public in China. This study conducted the data envelopment analysis (DEA) and regression analysis to analyse the impacts of the depth and breadth of investments in China on the performance of Taiwanese listed electronic companies. The empirical results show that, the breath of the investments in China has a positive correlation with the performance of Taiwanese companies; while the depth of investments in China has a negative and significant effect on the performances due to the companies’ lack of know-how, which leads to a high-learning cost. In summary, companies should strategize their decentralized and concentrated investments in China.

KEYWORDS:

• Investments in China
• dynamic data envelopment analysis
• operating performance
• Taiwanese electronics companies
• China

JEL CLASSIFICATION:

• C610
• L250
• L600

Acknowledgements

The authors would like to thank the Ministry of Science and Technology of the Republic of China, Taiwan for financially supporting this research under Contract No. MOST 103-2410-H-155-024.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Ministry of Science and Technology [MOST 103-2410-H-155-024].