Performance shortfalls and outward foreign direct investment by MNE subsidiaries: Evidence from China

Ziliang Deng, Tingting Li and Peter W. Liesch

International Business Review, 2022, vol. 31, issue 3

Abstract: Foreign subsidiaries of multinational enterprises (MNEs) have been conducting outward foreign direct investment (OFDI) into new overseas destinations. Drawing upon the behavioural theory of the firm, we explain that such OFDI can occur in response to performance shortfalls relative to aspirations. When performance shortfalls in subsidiaries are attributed to the institutional distance between them and the home country of the parent firm, these subsidiaries select institutionally closer destinations for their own OFDI. Our study goes beyond the direct investment of MNE headquarters and advances the internationalisation process model by investigating the underexplored, secondary and springboard-based internationalisation, and by underscoring the value of a subsidiary’s OFDI behaviour.

Keywords: Secondary internationalisation; Behavioural theory of the firm; Multinational enterprise; Performance shortfall; Internationalisation process model; Outward foreign direct investment (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:31:y:2022:i:3:s0969593121001700

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DOI: 10.1016/j.ibusrev.2021.101952

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