Institutional compatibility and the internationalization of Chinese SOEs: The moderating role of home subnational institutions

Jing Li, Jun Xia, Daniel Shapiro and Zhouyu Lin

Journal of World Business, 2018, vol. 53, issue 5, 641-652

Abstract: This study investigates the outward foreign direct investment (OFDI) of state-owned enterprises (SOEs) through the lens of the mechanism of institutional compatibility. Drawing on institutional theory, we argue that institutional compatibility (thus legitimacy) at home and institutional incompatibility (thus lack of legitimacy) abroad reduce SOEs’ OFDI activities. However, we also argue that home-country subnational factors (coercive, normative, and mimetic forces) provide a potentially offsetting effect. Using a sample of publicly listed Chinese firms, we find that coercive and mimetic forces generated from home subnational institutions reduce the negative effect of state ownership on OFDI activity.

Keywords: State-owned enterprise; Outward foreign direct investment; Coercive pressure; Normative support; Mimetic influence; Institutional theory; Subnational institutions (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (54)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:53:y:2018:i:5:p:641-652

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DOI: 10.1016/j.jwb.2018.02.002

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