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Does Outward FDI Generate Higher Productivity for Emerging Economy MNEs?—Micro-level Evidence from Chinese Manufacturing Firms

In: Outward Foreign Direct Investment of Chinese Enterprises

Author

Listed:
  • Wei Tian

    (Peking University)

  • Miaojie Yu

    (Liaoning University)

Abstract

This chapter investigates whether emerging economy multinational enterprises (EMEs) that undertake outward foreign direct investment (OFDI) become more productive, controlling for the self-selection into the global investment market. Particularly, we focus on the moderating effects of firm heterogeneity on the OFDI-productivity nexus. A theoretical framework incorporating the resource-based views and institutional theory is established and the propensity-score matching and difference-in-difference (DID) approaches are combined to test the framework, utilizing unique data on Chinese manufacturing firms over the sample period 2002–2008. We find that EMEs turn to be generally more productive after they conduct OFDI, but this productivity effect varies depending on the parent firm and investment strategy heterogeneity. Our results suggest that EMEs without state ownership but with stronger absorptive capability gain higher and more sustainable productivity effects and such gains are higher for EMEs investing in OECD than in non-OECD countries. Policy and managerial implications are discussed.

Suggested Citation

  • Wei Tian & Miaojie Yu, 2022. "Does Outward FDI Generate Higher Productivity for Emerging Economy MNEs?—Micro-level Evidence from Chinese Manufacturing Firms," Contributions to Economics, in: Outward Foreign Direct Investment of Chinese Enterprises, chapter 0, pages 125-164, Springer.
    • Handle: RePEc:spr:conchp:978-981-19-4719-3_5
    DOI: 10.1007/978-981-19-4719-3_5
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