Decisions of OFDI Engagement and Location for Heterogeneous Multinational firms: Evidence from Chinese firms

Yanmin Shao and Yan Shang

Technological Forecasting and Social Change, 2016, vol. 112, issue C, 178-187

Abstract: This paper explores how multinational firm take decisions with regard to outward FDI (OFDI) depending on total factor productivity (TFP). In particular, we examine how the TFP of an individual firm interacts with the host country's factors, and its indirect impact on the location decision. An annual data set from 2008 to 2013 for publicly listed multinational firms in China is examined. The empirical results suggest that, first, the TFP could stimulate the OFDI engagement of a firm. Second, the influence of the firm's TFP is consistent across firms with different institutional advantages. Third, the firm's TFP reduces the importance of the host country's market potential on the likelihood of the firm's entry into a host country.

Keywords: Total factor productivity; Outward foreign direct investment; Heterogeneous firms; Location decision (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:112:y:2016:i:c:p:178-187

DOI: 10.1016/j.techfore.2016.07.023

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