Internationalization of Enterprise Resource Planning Vendors: A Case Study of SAP and Oracle in the Chinese High-End Market

Internationalization of Enterprise Resource Planning Vendors: A Case Study of SAP and Oracle in the Chinese High-End Market

Shijie Li
Copyright: © 2023 |Pages: 14
DOI: 10.4018/IJBSA.326515
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Abstract

International business theory suggests that multinational corporations are usually disadvantaged compared to local firms when competing in a host market. However, we find that foreign enterprise resource planning (ERP) vendors in the Chinese high-end ERP market perform significantly better than local vendors. To understand this gap, the authors first analyze the ERP business model and its four characteristics as a service and use Dunning's OLI paradigm to specify the ownership-specific, internalization-incentive, and location-specific advantages (O-, I-, and L-advantages) required for foreign ERP vendors to compete in the host country's high-end market. Then, after conducting case studies of the two foreign vendors with the highest share in the Chinese high-end ERP market, SAP and Oracle, they confirm that the O-advantages from strong brand and reputation, high research and development capabilities, professional partners, I-advantages from wholly owned subsidiaries, and L-advantages from economically developed regions cause SAP and Oracle to excel in the Chinese high-end ERP market.
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Dunning’S Oli Paradigm

Dunning’s OLI paradigm is considered the most comprehensive analytical tool for studying MNCs overseas. Dunning (1977, 1993) argued that MNCs must have ownership-specific, internalization-incentive, and location-specific advantages (O-, I-, and L-advantages) to succeed.

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