Managing networks by MNCs to achieve competitive advantage in the changing environment : A case study of China Unionpay

Abstract: Purpose: The purpose of this research is to analyze the effect of changing institutional environment on the case company China Unionpay (CUP) and the management of the new competitive situation of Chinese electronic funds transfer market. Moreover, the impact of this change on the networks and relationships between China Unionpay and their customers is examined. Design/methodology/approach: The paper presents an extensive review of academic literature to build an understanding of the institutional environment. Furthermore the case study is used to identify important factors. CUP is chosen to study as it is the only one losing its monopoly place in Chinese market. The qualitative data collection method is used in this thesis to collect the relevant data for research study.  A complementary quantitative customers’ data is also included to strengthen the qualitative data. Findings: The identified core factors from the changing environment are following: government and legal institutions, competitors as institutional networks. Firm’s relationship commitments are based on market knowledge and opportunities; firm’s position in the institutional networks is based on its market learning and trust-building activities. To have a closer relationship with customers, firms should think about developing social network relationship with customers. A dynamic relationship with government institutions, legal institutions and competitors can be seen as a strategy at CUP to maintain the balance with the new competitive forces and institutions connected with the CUP. Research implications: The empirical study is limited to one case which limits the ability to generalize. The exploratory findings should be further tested using the quantitative study, which enables to analyze with large sample of firm managing the changing situations of institutional environment. Furthermore firms internationalizing from mature countries into the Chinese market should be studied. Practical implications: This study contains practical implications for firms from emerging countries having interest to manage existing and expand their business networks in the changing circumstances of the institutional environment. The thesis identifies important factors when analyzing the firm’s relationship with players in the network. Originality/value: The research covers the field of study related to international business strategy focusing on firm’s networks and relationships with its competitors and customers. Keywords: institutional environment, network relationships, government and legal systems, competitors, customers, China Unionpay