The Exit of Taiwanese Enterprises from Mainland China: A Spatial Temporal Analysis of Strategic Coupling

Introduction

The exit of transnational corporations (TNCs) from a host region is a critical event that can have significant implications for the region's economy and development. This study aims to investigate the temporal and spatial attributes of the exit of Taiwanese enterprises from mainland China and the influence of strategic coupling on their exit.

Literature Review and Theoretical Framework

Strategic coupling is a concept in global production networks (GPNs) that refers to the relationship between the strategic needs of global industries and the locational assets of regions. It is argued that regions with favorable locational advantages are more likely to attract and retain investment from TNCs, while TNCs are more likely to exit regions that fail to provide the necessary locational advantages.

Analytical Framework for Decoupling of TNCs from the Invested Regions

This study uses the concept of strategic coupling to examine the exit behavior of TNCs. Specifically, two variables are proposed to describe the exit behavior of TNCs: strategic coupling-locational advantages and spatial stickiness. Locational advantages refer to the advantages provided by the location to the TNCs, such as access to resources, markets, and infrastructure. Spatial stickiness refers to the degree to which TNCs are embedded in the regional economy, including the presence of relational assets, social networks, and institutional ties.

Methodologies

This study uses a quantitative analysis of the impact of strategic coupling on the exit of Taiwanese enterprises in mainland China. A total of 30,000 Taiwanese enterprises in mainland China were selected as the sample population, and a logistic regression model was employed to analyze the data.

Results and Discussion

The spatial distribution pattern of the exit rate of Taiwanese enterprises in mainland China varied at different phases. 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. The relationship between Taiwanese enterprises and the invested areas changed from captive coupling to cooperative coupling and subsequently to absorptive coupling. The coupling modes significantly influenced the exit of Taiwanese enterprises from mainland China.

Conclusion

This study contributes to the literature on the exit of TNCs from host regions by examining the influence of strategic coupling on the exit of Taiwanese enterprises from mainland China. The findings suggest that the spatial distribution pattern of the exit rate varied depending on the phase and that the coupling modes played a significant role in their exit. Furthermore, the negative impact of COVID-19 on the backward connection of Taiwanese corporations, which became more reliant on the mainland China market and local suppliers than ever, led to Taiwan-favoring policies and the regional innovation environment as the primary locational advantages for retaining Taiwanese enterprises after the global financial crisis. These findings provide valuable insights for policymakers in developing regions seeking to attract and retain investment from TNCs.