Culture distance, host-country risks and the international expansion model choice: evidence from China

Mingqian Liu and Zongjun Wang

International Journal of Management and Enterprise Development, 2010, vol. 8, issue 2, 103-116

Abstract: Literatures on international expansion model choice pay little attention to the firms from developing countries. Using a sample of 248 foreign direct investment (FDI) cases of Chinese firms, this paper provides empirical evidence on the role of culture distance and host-country risk in influencing the international development model choice. The results show the higher the culture distance between China and the Host countries, the more likely Chinese firms will choose acquisition. However, the host-country risks reverse the decision. As a special consideration, the central state-owned firms (CSFs) show significant positive tendency to acquisition. Moreover, in resource-based industry, Chinese firms prefer to acquisition.

Keywords: cultural distance; host-country risks; foreign direct investment; acquisitions; green field investment; international expansion; developing countries; China; state-owned enterprises; culture; international development; resource-based industries; management; enterprise development. (search for similar items in EconPapers)
Date: 2010
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