More policy is not always effective policy: How policy coherence affects firm internationalization

Fredrik Utesch-Xiong, Gunnar Leymann and Sarianna M. Lundan

International Business Review, 2024, vol. 33, issue 3

Abstract: This paper aims to contribute to our understanding of the effects of home country policy change on the internationalization of EMNEs. Our analysis is based on a unique data set of Chinese outward FDI policies in 1979–2019 that enables us to examine policy coherence in three dimensions: signal ambiguity, instrument expansion, and scope expansion. By analyzing Chinese POEs between 2012 and 2018, we find that more ambiguous policy signals reduce the likelihood of cross-border M&As. Furthermore, we find that the expansion of policy instruments and policy scope also negatively affect internationalization. These effects become weaker over time, and a smaller sample of SOEs shows no susceptibility to instrument and scope expansion. We conclude that while the content of policy is essential, the coherence of the policy process can have an impact that may overwhelm the positive effects of policies if the firms lack policy awareness, or the implementation exceeds their short-term capacity to adjust. Thus, more policy is not always more effective policy.

Keywords: Home-country policies; OFDI; EMNEs; Policy change; Policy coherence; Policy instruments; Home-country learning; CATA; China (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S096959312200110X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:33:y:2024:i:3:s096959312200110x

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic
http://www.elsevier. ... me/133/bibliographic

DOI: 10.1016/j.ibusrev.2022.102082

Access Statistics for this article

International Business Review is currently edited by P. Ghauri

More articles in International Business Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().