Navigating the Policy Risk Landscape: How Emerging Economy MNEs Make OFDI Location Choices

Miao Wang

China Report, 2025, vol. 61, issue 4, 487-508

Abstract: This study examines the impact of policy risk differences on outward foreign direct investment (OFDI) of emerging economies’ multinational enterprises (MNEs) based on organisational learning theory. A framework analyses the relationship between policy risk differences and OFDI, and the moderating effects of institutional quality and economic dependence. Using China’s OFDI data from 2009 to 2021, empirical results show policy risk differences negatively impact Chinese enterprises’ OFDI, while institutional quality and economic dependence weaken this effect. Heterogeneity analysis indicates the negative impact is significant in more developed hosts, with insufficient political relations and less Chinese aid. Findings suggest Chinese multinationals are risk-averse, preferring hosts with smaller policy risk differences, considering the institution, development and bilateral political-economic exchanges in location decisions.

Keywords: Policy risk difference; outward foreign direct investment; emerging economy multinational enterprises; organisational learning (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/00094455251366627 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:chnrpt:v:61:y:2025:i:4:p:487-508

DOI: 10.1177/00094455251366627

Access Statistics for this article

More articles in China Report
Bibliographic data for series maintained by SAGE Publications ().