Governance and the Choice of Entry Mode by FDI Firms Entering China

Yi-Chieh Chang () and Ming-sung Kao ()
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Yi-Chieh Chang: Department of Business Administration, St. John's University/ Taipei Campus, Taiwan.
Ming-sung Kao: Department of International Trade and Finance, Fu Jen Catholic University, Taiwan.

Economics Bulletin, 2009, vol. 29, issue 4, 2957-2966

Abstract: In the past 20 years, China's economy made a dramatic change. This was likely due to its improved institutional environment. In this study, we use 6 governance indicators, compiled by World Bank, to measure the change in China's institutional environment and to provide some empirical evidence of the linkage between the quality of governance and a firm's choice on entry mode. We determined that improved political stability, regulatory quality and rule of law would induce foreign firms entering China to be more willing to utilize a high-commitment entry mode, and thus, would result in more stable capital investment from foreign organizations.

Keywords: governance; entry mode (search for similar items in EconPapers)
JEL-codes: F2 (search for similar items in EconPapers)
Date: 2009-11-30
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