What drives outward FDI of Chinese firms? Testing the explanatory power of three theoretical frameworks

Chengqi Wang, Junjie Hong, Mario Kafouros and Agyenim Boateng

International Business Review, 2012, vol. 21, issue 3, 425-438

Abstract: This study examines the forces driving outward FDI of emerging-market firms. Its contribution lies in integrating and testing insights from institutional theory, industrial organization economics and the resource-based view of the firm. This approach enables us to consider three different levels of analysis – firm, industry and country – and, thus, to distinguish between different sources of variation. Using a large firm-level Chinese dataset, we offer new evidence indicating that government support and the industrial structure of the home country of the investing firm play a crucial role in explaining outward FDI. By contrast, technological and advertising resources tend to be less important. The findings have important implications for theorizing. Although some firm-specific idiosyncrasies still play a role in explaining variations across firms in the same industry, the theoretical analysis and empirical results consistently indicate that foreign investment of Chinese firms is largely driven by their distinctive institutional and industrial environment.

Keywords: China; Determinants; Emerging-market firms; Industry; Institution; Outward FDI; Resources (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (106)

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DOI: 10.1016/j.ibusrev.2011.05.004

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