China’s Belt and Road Initiative and large-scale outbound investment

Shen Kunrong and Jin Gang

China Political Economy, 2018, vol. 1, issue 2, 219-240

Abstract: Purpose - The purpose of this paper is to comprehensively examine the influence of formal and informal institutional differences on enterprise investment margin, mode and result. Design/methodology/approach - This paper is based on 2,440 micro samples of large-scale outbound investment from 609 Chinese enterprises from the years 2005 to 2016. Findings - The study has found that formal institutional differences have little impact on investment scale, but significantly affect investment diversification. In order to avoid the management risks brought by formal institutional differences, enterprises tend to a full ownership structure. However, the choice between greenfield investment and cross-border mergers and acquisitions is not affected by formal institutional differences. In contrast, the impact of informal institutional differences is more extensive. Both formal and informal institutional differences significantly increase the probability of investment failure. Further research found that the Belt and Road Initiative (BRI) bridges the formal institutional differences. Originality/value - The study concludes that developing the BRI, especially cultural exchanges with countries alongside the Belt and Road, will help enterprises to “go global” faster and better.

Keywords: Formal institutional differences; Informal institutional differences; Belt and Road Initiative; Large-scale outbound investment (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eme:cpepps:cpe-10-2018-017

DOI: 10.1108/CPE-10-2018-017

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