Advanced Search
MyIDEAS: Login to save this article or follow this journal

Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms

Contents:

Author Info

  • Wei, Yingqi
  • Zheng, Nan
  • Liu, Xiaohui
  • Lu, Jiangyong
Registered author(s):

    Abstract

    This research examines the factors determining whether or not exporting firms expand to outward foreign direct investment (OFDI) as part of their internationalisation strategy, using a recent survey of Chinese private-owned enterprises. We carry out a multi-dimensional analysis to investigate the impact of firm productivity, internal resources and the external environment on OFDI decisions, including both the decision to undertake OFDI and the volume of OFDI flows. It is found that productivity, technology-based capability, export experience, industry entry barriers, subnational institutions and intermediary institutional support affect firms’ OFDI decisions. The findings have important policy and managerial implications.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0969593113000760
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 23 (2014)
    Issue (Month): 2 ()
    Pages: 356-370

    as in new window
    Handle: RePEc:eee:iburev:v:23:y:2014:i:2:p:356-370

    Contact details of provider:
    Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description

    Order Information:
    Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic
    Web: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic

    Related research

    Keywords: Chinese private-owned enterprises; Heterogeneity theory; OFDI; Productivity; The integrated ‘strategic tripod’ framework;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Deng, Ping, 2009. "Why do Chinese firms tend to acquire strategic assets in international expansion?," Journal of World Business, Elsevier, vol. 44(1), pages 74-84, January.
    2. Suma Athreye & Sandeep Kapur, 2009. "Introduction: The internationalization of Chinese and Indian firms: trends, motivations and strategy," Industrial and Corporate Change, Oxford University Press, vol. 18(2), pages 209-221, April.
    3. Daphne W Yiu & ChungMing Lau & Garry D Bruton, 2007. "International venturing by emerging economy firms: the effects of firm capabilities, home country networks, and corporate entrepreneurship," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 519-540, July.
    4. Wang, Chengqi & Hong, Junjie & Kafouros, Mario & Boateng, Agyenim, 2012. "What drives outward FDI of Chinese firms? Testing the explanatory power of three theoretical frameworks," International Business Review, Elsevier, vol. 21(3), pages 425-438.
    5. Chou, Kuang-Hann & Chen, Chien-Hsun & Mai, Chao-Cheng, 2011. "The impact of third-country effects and economic integration on China's outward FDI," Economic Modelling, Elsevier, vol. 28(5), pages 2154-2163, September.
    6. Steven Globerman & Daniel Shapiro, 2009. "Economic and strategic considerations surrounding Chinese FDI in the United States," Asia Pacific Journal of Management, Springer, vol. 26(1), pages 163-183, March.
    7. Rugman, Alan M. & Li, Jing, 2007. "Will China's Multinationals Succeed Globally or Regionally?," European Management Journal, Elsevier, vol. 25(5), pages 333-343, October.
    8. Guillermo Cardoza & Gaston Fornes, 2011. "The internationalisation of SMEs from China: The case of Ningxia Hui Autonomous Region," Asia Pacific Journal of Management, Springer, vol. 28(4), pages 737-759, December.
    9. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
    10. Yildiz, Harun Emre & Fey, Carl Felix, 2012. "The liability of foreignness reconsidered: New insights from the alternative research context of transforming economies," International Business Review, Elsevier, vol. 21(2), pages 269-280.
    11. Joachim Wagner, 2005. "Exports, foreign direct investment, and productivity: Evidence from German firm level data," Working Paper Series in Economics 8, University of Lüneburg, Institute of Economics.
    12. Kevin Honglin Zhang, 2009. "Rise of Chinese Multinational Firms," Chinese Economy, M.E. Sharpe, Inc., vol. 42(6), pages 81-96, November.
    13. Gloria Ge & Daniel Ding, 2008. "A strategic analysis of surging Chinese manufacturers: The case of Galanz," Asia Pacific Journal of Management, Springer, vol. 25(4), pages 667-683, December.
    14. Yuan Chen & Michael Young, 2010. "Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective," Asia Pacific Journal of Management, Springer, vol. 27(3), pages 523-539, September.
    15. Pedersen, Torben & Shaver, J. Myles, 2000. "Internationalization Revisited: The "Big Step" Hypotheses," Working Papers 5-2000, Copenhagen Business School, Department of International Economics and Management.
    16. Girma, Sourafel & Gorg, Holger & Strobl, Eric, 2004. "Exports, international investment, and plant performance: evidence from a non-parametric test," Economics Letters, Elsevier, vol. 83(3), pages 317-324, June.
    17. Deng, Ping, 2004. "Outward investment by Chinese MNCs: Motivations and implications," Business Horizons, Elsevier, vol. 47(3), pages 8-16.
    18. Cui, Lin & Jiang, Fuming, 2009. "FDI entry mode choice of Chinese firms: A strategic behavior perspective," Journal of World Business, Elsevier, vol. 44(4), pages 434-444, October.
    19. Liu, Xiaohui & Buck, Trevor & Shu, Chang, 2005. "Chinese economic development, the next stage: outward FDI?," International Business Review, Elsevier, vol. 14(1), pages 97-115, February.
    20. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    21. Sizhong Sun, 2009. "How Does FDI Affect Domestic Firms' Exports? Industrial Evidence," The World Economy, Wiley Blackwell, vol. 32(8), pages 1203-1222, 08.
    22. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 499-518, July.
    23. Head, Keith & Ries, John, 2003. "Heterogeneity and the FDI versus export decision of Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 448-467, December.
    24. Chenggang Xu, 2011. "The Fundamental Institutions of China's Reforms and Development," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1076-1151, December.
    25. Luo, Yadong & Xue, Qiuzhi & Han, Binjie, 2010. "How emerging market governments promote outward FDI: Experience from China," Journal of World Business, Elsevier, vol. 45(1), pages 68-79, January.
    26. Grazia D Santangelo & Klaus E Meyer, 2011. "Extending the internationalization process model: Increases and decreases of MNE commitment in emerging economies," Journal of International Business Studies, Palgrave Macmillan, vol. 42(7), pages 894-909, September.
    27. Davide Castellani & Antonello Zanfei, 2007. "Internationalisation, Innovation and Productivity: How Do Firms Differ in Italy?," The World Economy, Wiley Blackwell, vol. 30(1), pages 156-176, 01.
    28. Zhao, Wei & Liu, Ling & Zhao, Ting, 2010. "The contribution of outward direct investment to productivity changes within China, 1991-2007," Journal of International Management, Elsevier, vol. 16(2), pages 121-130, June.
    29. Arnold, Jens Matthias & Hussinger, Katrin, 2006. "Exports versus FDI in German manufacturing: firm performance and participation in international markets," Discussion Paper Series 1: Economic Studies 2006,04, Deutsche Bundesbank, Research Centre.
    30. Liu, Hong & Li, Kequan, 2002. "Strategic Implications of Emerging Chinese Multinationals:: The Haier Case Study," European Management Journal, Elsevier, vol. 20(6), pages 699-706, December.
    31. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
    32. Peter J Buckley & Donald R Lessard, 2005. "Regaining the edge for international business research," Journal of International Business Studies, Palgrave Macmillan, vol. 36(6), pages 595-599, November.
    33. Diego Quer & Enrique Claver & Laura Rienda, 2012. "Political risk, cultural distance, and outward foreign direct investment: Empirical evidence from large Chinese firms," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 1089-1104, December.
    34. Boter, Hakan & Holmquist, Carin, 1996. "Industry characteristics and internationalization processes in small firms," Journal of Business Venturing, Elsevier, vol. 11(6), pages 471-487, November.
    35. Shige Makino & Andrew Delios, 1996. "Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia," Journal of International Business Studies, Palgrave Macmillan, vol. 27(4), pages 905-927, December.
    36. Xiaohua Yang & Yi Jiang & Rongping Kang & Yinbin Ke, 2009. "A comparative analysis of the internationalization of Chinese and Japanese firms," Asia Pacific Journal of Management, Springer, vol. 26(1), pages 141-162, March.
    37. John Child & Suzana B. Rodrigues, 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?," Management and Organization Review, International Association of Chinese Management Research, vol. 1(3), pages 381-410, November.
    38. Gary A Knight & S Tamer Cavusgil, 2004. "Innovation, organizational capabilities, and the born-global firm," Journal of International Business Studies, Palgrave Macmillan, vol. 35(4), pages 334-334, July.
    39. Liu, Xiaming & Xiao, Wen & Huang, Xianhai, 2008. "Bounded entrepreneurship and internationalisation of indigenous Chinese private-owned firms," International Business Review, Elsevier, vol. 17(4), pages 488-508, August.
    40. Kent Eriksson & Jan Johanson & Anders Majkg�rd & D Deo Sharma, 1997. "Experimental Knowledge and Costs in the Internationalization Process," Journal of International Business Studies, Palgrave Macmillan, vol. 28(2), pages 337-360, June.
    41. Deng, Ping, 2007. "Investing for strategic resources and its rationale: The case of outward FDI from Chinese companies," Business Horizons, Elsevier, vol. 50(1), pages 71-81.
    42. Gary A Knight & S Tamar Cavusgil, 2004. "Innovation, organizational capabilities, and the born-global firm," Journal of International Business Studies, Palgrave Macmillan, vol. 35(2), pages 124-141, March.
    43. Gao, Lan & Liu, Xiaohui & Zou, Huan, 2013. "The role of human mobility in promoting Chinese outward FDI: A neglected factor?," International Business Review, Elsevier, vol. 22(2), pages 437-449.
    44. He, Wei & Lyles, Marjorie A., 2008. "China's outward foreign direct investment," Business Horizons, Elsevier, vol. 51(6), pages 485-491.
    45. Geert Duysters & Jojo Jacob & Charmianne Lemmens & Yu Jintian, 2009. "Internationalization and technological catching up of emerging multinationals: a comparative case study of China's Haier group," Industrial and Corporate Change, Oxford University Press, vol. 18(2), pages 325-349, April.
    46. Shige Makino & Andrew Delios, 1996. "Local Knowledge Transfer and Performance: Implications for Alliance Formation in Asia," Journal of International Business Studies, Palgrave Macmillan, vol. 27(5), pages 905-927, December.
    47. Mike W Peng & Denis Y L Wang & Yi Jiang, 2008. "An institution-based view of international business strategy: a focus on emerging economies," Journal of International Business Studies, Palgrave Macmillan, vol. 39(5), pages 920-936, July.
    48. Klaus E. Meyer & Saul Estrin & Sumon Kumar Bhaumik & Mike W. Peng, 2009. "Institutions, resources and entry strategies in emerging economies," LSE Research Online Documents on Economics 4217, London School of Economics and Political Science, LSE Library.
    49. Fukunari Kimura & Kozo Kiyota, 2006. "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(4), pages 695-719, December.
    50. Lin Cui & Fuming Jiang, 2010. "Behind ownership decision of Chinese outward FDI: Resources and institutions," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 751-774, December.
    51. He, Xinming & Wei, Yingqi, 2011. "Linking market orientation to international market selection and international performance," International Business Review, Elsevier, vol. 20(5), pages 535-546, October.
    52. Zhang, Xiaoxi & Daly, Kevin, 2011. "The determinants of China's outward foreign direct investment," Emerging Markets Review, Elsevier, vol. 12(4), pages 389-398.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:iburev:v:23:y:2014:i:2:p:356-370. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.