IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v98y2025ics1059056024008256.html
   My bibliography  Save this article

Foreign residency rights and firm internationalization

Author

Listed:
  • Chen, Yinying
  • Jiang, Hui

Abstract

Using a unique data set of privately owned firms listed on the Chinese A-share market, we examine the relation between controlling persons' foreign residency rights and firm internationalization. We find that controlling persons' foreign residency rights have a positive effect on firm internationalization. This finding is robust after considering endogeneity issues, alternative measures of foreign residency rights, and the impact of financial crisis. Moreover, we find that the positive effect of foreign residency rights on firm internationalization is more pronounced when firms have international business in residency countries/regions, when the cultural/institutional distance between residency countries/regions and China is lower, or when residency countries/regions have better international relations with China. Finally, further analysis shows that firms whose controlling persons have foreign residency rights make better cross-border acquisitions. Overall, our findings shed light on the positive role of controlling persons' foreign residency rights in promoting firm internationalization. As such, our study enriches the research on controlling persons’ foreign residency rights and the international business literature.

Suggested Citation

  • Chen, Yinying & Jiang, Hui, 2025. "Foreign residency rights and firm internationalization," International Review of Economics & Finance, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:reveco:v:98:y:2025:i:c:s1059056024008256
    DOI: 10.1016/j.iref.2024.103833
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056024008256
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2024.103833?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. José Carlos Pinho & Christiane Prange, 2016. "The effect of social networks and dynamic internationalization capabilities on international performance," Post-Print hal-02313305, HAL.
    2. Jan Johanson & Jan-Erik Vahlne, 2009. "The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1411-1431, December.
    3. Meng, Qingbin & Li, Haitong & Chan, Kam C., 2023. "Fleeing entrepreneurs: Foreign residency right and corporate risk-taking," Research in International Business and Finance, Elsevier, vol. 65(C).
    4. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
    5. Elizabeth Maitland & André Sammartino, 2015. "Managerial cognition and internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(7), pages 733-760, September.
    6. Bai, Wensong & Johanson, Martin & Oliveira, Luis & Ratajczak-Mrozek, Milena & Francioni, Barbara, 2022. "Where business networks and institutions meet: Internationalization decision-making under uncertainty," Journal of International Management, Elsevier, vol. 28(1).
    7. Wang, Yichen & Hu, Jun & Chen, Jia, 2023. "Does Fintech facilitate cross-border M&As? Evidence from Chinese A-share listed firms," International Review of Financial Analysis, Elsevier, vol. 85(C).
    8. Paul D Ellis, 2011. "Social ties and international entrepreneurship: Opportunities and constraints affecting firm internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(1), pages 99-127, January.
    9. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
    10. Buckley, Peter J. & Elia, Stefano & Kafouros, Mario, 2014. "Acquisitions by emerging market multinationals: Implications for firm performance," Journal of World Business, Elsevier, vol. 49(4), pages 611-632.
    11. Dikova, Desislava & Rao Sahib, Padma, 2013. "Is cultural distance a bane or a boon for cross-border acquisition performance?," Journal of World Business, Elsevier, vol. 48(1), pages 77-86.
    12. Kedia, Ben L. & Reddy, Rama Krishna, 2016. "Language and cross-border acquisitions: An exploratory study," International Business Review, Elsevier, vol. 25(6), pages 1321-1332.
    13. Stephanie A Fernhaber & Brett Anitra Gilbert & Patricia P McDougall, 2008. "International entrepreneurship and geographic location: an empirical examination of new venture internationalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(2), pages 267-290, March.
    14. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    15. Malhotra, Shavin & Lin, Xiaohua & Farrell, Carlyle, 2016. "Cross-national uncertainty and level of control in cross-border acquisitions: A comparison of Latin American and U.S. multinationals," Journal of Business Research, Elsevier, vol. 69(6), pages 1993-2004.
    16. Moeller, Sara B. & Schlingemann, Frederik P., 2005. "Global diversification and bidder gains: A comparison between cross-border and domestic acquisitions," Journal of Banking & Finance, Elsevier, vol. 29(3), pages 533-564, March.
    17. Madsen, Tage Koed & Servais, Per, 1997. "The internationalization of Born Globals: An evolutionary process?," International Business Review, Elsevier, vol. 6(6), pages 561-583, December.
    18. Alon, Ilan & Herbert, Theodore T., 2009. "A stranger in a strange land: Micro political risk and the multinational firm," Business Horizons, Elsevier, vol. 52(2), pages 127-137.
    19. Sascha Kraus & Tina Ambos & Felix Eggers & Beate Cesinger, 2015. "Distance and perceptions of risk in internationalization decisions," Post-Print hal-02011127, HAL.
    20. Jan Johanson & Jan-Erik Vahlne, 2006. "Commitment and opportunity development in the internationalization process: A note on the Uppsala internationalization process model," Management International Review, Springer, vol. 46(2), pages 165-178, March.
    21. Pinho, José Carlos & Prange, Christiane, 2016. "The effect of social networks and dynamic internationalization capabilities on international performance," Journal of World Business, Elsevier, vol. 51(3), pages 391-403.
    22. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
    23. Wei, Ziyi & Nguyen, Quyen T.K., 2017. "Subsidiary strategy of emerging market multinationals: A home country institutional perspective," International Business Review, Elsevier, vol. 26(5), pages 1009-1021.
    24. Nicole E Coviello, 2006. "The network dynamics of international new ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(5), pages 713-731, September.
    25. Chen, Haiyang & Hu, Michael Y., 2002. "An analysis of determinants of entry mode and its impact on performance," International Business Review, Elsevier, vol. 11(2), pages 193-210, April.
    26. William H Davidson, 1980. "The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(2), pages 9-22, June.
    27. Du, Xingqiang & Luo, Jin-hui, 2016. "Political Connections, Home Formal Institutions, and Internationalization: Evidence from China," Management and Organization Review, Cambridge University Press, vol. 12(1), pages 103-133, March.
    28. Mezias, John M., 2002. "How to identify liabilities of foreignness and assess their effects on multinational corporations," Journal of International Management, Elsevier, vol. 8(3), pages 265-282.
    29. Chen, Donghua & Chen, Yinying & Li, Oliver Zhen & Ni, Chenkai, 2018. "Foreign residency rights and corporate fraud," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 142-163.
    30. Estrin, Saul & Meyer, Klaus E. & Pelletier, Adeline, 2018. "Emerging Economy MNEs: How does home country munificence matter?," Journal of World Business, Elsevier, vol. 53(4), pages 514-528.
    31. Hou, Canran & Liu, Huan, 2020. "Foreign residency rights and corporate cash holdings," Journal of Corporate Finance, Elsevier, vol. 64(C).
    32. Drogendijk, Rian & Slangen, Arjen, 2006. "Hofstede, Schwartz, or managerial perceptions? The effects of different cultural distance measures on establishment mode choices by multinational enterprises," International Business Review, Elsevier, vol. 15(4), pages 361-380, August.
    33. Wang, Xia & Feng, Mingming & Xu, Xiaodong, 2019. "Political connections of independent directors and firm internationalization: An empirical study of Chinese listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 58(C).
    34. Masulis, Ronald W. & Wang, Cong & Xie, Fei, 2012. "Globalizing the boardroom—The effects of foreign directors on corporate governance and firm performance," Journal of Accounting and Economics, Elsevier, vol. 53(3), pages 527-554.
    35. Desislava Dikova & Padma Rao Sahib & Arjen van Witteloostuijn, 2010. "Cross-border acquisition abandonment and completion: The effect of institutional differences and organizational learning in the international business service industry, 1981–2001," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(2), pages 223-245, February.
    36. Liu, Ailan & Lu, Cuicui & Wang, Zhixuan, 2020. "The roles of cultural and institutional distance in international trade: Evidence from China's trade with the Belt and Road countries," China Economic Review, Elsevier, vol. 61(C).
    37. Ciravegna, Luciano & Majano, Sara B. & Zhan, Ge, 2014. "The inception of internationalization of small and medium enterprises: The role of activeness and networks," Journal of Business Research, Elsevier, vol. 67(6), pages 1081-1089.
    38. Luo, Yadong & Zhang, Huan, 2016. "Emerging Market MNEs: Qualitative Review and Theoretical Directions," Journal of International Management, Elsevier, vol. 22(4), pages 333-350.
    39. Oesterle, Michael-Jörg & Elosge, Corinna & Elosge, Lukas, 2016. "Me, myself and I: The role of CEO narcissism in internationalization decisions," International Business Review, Elsevier, vol. 25(5), pages 1114-1123.
    40. Sethi, Deepak & Guisinger, Stephen, 2002. "Liability of foreignness to competitive advantage: How multinational enterprises cope with the international business environment," Journal of International Management, Elsevier, vol. 8(3), pages 223-240.
    41. Kraus, Sascha & Ambos, Tina C. & Eggers, Felix & Cesinger, Beate, 2015. "Distance and perceptions of risk in internationalization decisions," Journal of Business Research, Elsevier, vol. 68(7), pages 1501-1505.
    42. André van Hoorn & Robbert Maseland, 2016. "How institutions matter for international business: Institutional distance effects vs institutional profile effects," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(3), pages 374-381, April.
    43. Mitchell A. Petersen, 2009. "Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches," The Review of Financial Studies, Society for Financial Studies, vol. 22(1), pages 435-480, January.
    44. Yadong Luo & Rosalie L Tung, 2007. "International expansion of emerging market enterprises: A springboard perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 481-498, July.
    45. Zheng, Qiuxia & Noorderhaven, Niels & Du, Jian, 2022. "Making the unlikely marriage work: The integration process of Chinese strategic asset-seeking acquisitions," Journal of World Business, Elsevier, vol. 57(3).
    46. Zhang, Jianhong, 2022. "Liability of emergingness and EMNEs’ cross-border acquisition completion: A legitimacy perspective," International Business Review, Elsevier, vol. 31(2).
    47. Zucchella, Antonella & Palamara, G. & Denicolai, S., 2007. "The drivers of the early internationalization of the firm," Journal of World Business, Elsevier, vol. 42(3), pages 268-280, September.
    48. Nicole Coviello & Martin Cox, 2006. "The resource dynamics of international new venture networks," Journal of International Entrepreneurship, Springer, vol. 4(2), pages 113-132, September.
    49. Rodolphe Desbordes, 2010. "Global And Diplomatic Political Risks And Foreign Direct Investment," Economics and Politics, Wiley Blackwell, vol. 22(1), pages 92-125, March.
    50. Zhang, Jianhong & Zhou, Chaohong & Ebbers, Haico, 2011. "Completion of Chinese overseas acquisitions: Institutional perspectives and evidence," International Business Review, Elsevier, vol. 20(2), pages 226-238, April.
    51. Berrill, Jenny & Campa, Domenico & O'Hagan-Luff, Martha, 2021. "Firm diversification and earnings management strategies: European evidence," International Review of Financial Analysis, Elsevier, vol. 78(C).
    52. Zhu, Siyuan & Lu, Rong & Xu, Tianli & Wu, Wenbin & Chen, Yang, 2024. "Can common institutional owners inhibit bad mergers and acquisitions? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 246-266.
    53. Christian Felzensztein & George Saridakis & Bochra Idris & Gabriel P. Elizondo, 2022. "Do economic freedom, business experience, and firm size affect internationalization speed? Evidence from small firms in Chile, Colombia, and Peru," Journal of International Entrepreneurship, Springer, vol. 20(1), pages 115-156, March.
    54. Elitsa R Banalieva & Charles Dhanaraj, 2013. "Home-region orientation in international expansion strategies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(2), pages 89-116, February.
    55. Fernhaber, Stephanie A. & Li, Dan, 2013. "International exposure through network relationships: Implications for new venture internationalization," Journal of Business Venturing, Elsevier, vol. 28(2), pages 316-334.
    56. Mariassunta Giannetti & Guanmin Liao & Xiaoyun Yu, 2015. "The Brain Gain of Corporate Boards: Evidence from China," Journal of Finance, American Finance Association, vol. 70(4), pages 1629-1682, August.
    57. Oehmichen, Jana & Firk, Sebastian & Wolff, Michael & Haas, Veronika, 2022. "Board experience and value creation in cross-border acquisitions: The role of acquirer and target country institutions," International Business Review, Elsevier, vol. 31(4).
    58. He, Xinming & Zhang, Jianhong, 2018. "Emerging market MNCs' cross-border acquisition completion: Institutional image and strategies," Journal of Business Research, Elsevier, vol. 93(C), pages 139-150.
    59. Benjamin M Oviatt & Patricia P McDougall, 2005. "The internationalization of entrepreneurship," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(1), pages 2-8, January.
    60. Coviello, Nicole & Munro, Hugh, 1997. "Network relationships and the internationalisation process of small software firms," International Business Review, Elsevier, vol. 6(4), pages 361-386, August.
    61. Tan, Xue & Yu, Lin & Fung, Hung-Gay, 2022. "Firms with short-termism: Evidence from expatriate controlling shareholders," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    62. Benjamin M Oviatt & Patricia Phillips McDougall, 1994. "Toward a Theory of International New ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(1), pages 45-64, March.
    63. Ming Hua Li & Lin Cui & Jiangyong Lu, 2014. "Varieties in state capitalism: Outward FDI strategies of central and local state-owned enterprises from emerging economy countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(8), pages 980-1004, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hitt, Michael A. & Li, Dan & Xu, Kai, 2016. "International strategy: From local to global and beyond," Journal of World Business, Elsevier, vol. 51(1), pages 58-73.
    2. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    3. Telma Mendes & Carina Silva & Alexandra Braga, 2023. "Dancing with Giants: A Unified Framework for Cooperation Networks, Speed of Internationalisation, and Performance," Sustainability, MDPI, vol. 15(3), pages 1-32, January.
    4. Schweizer, Roger & Vahlne, Jan-Erik, 2022. "Non-linear internationalization and the Uppsala model – On the importance of individuals," Journal of Business Research, Elsevier, vol. 140(C), pages 583-592.
    5. Maldea, Radu-Andrei, 2023. "Winning when Going Global – On the Role of Heritage and Strategic Moves for Internationalization Endeavors of Start-ups," Junior Management Science (JUMS), Junior Management Science e. V., vol. 8(2), pages 532-568.
    6. Jiang, Guohua & Kotabe, Masaaki & Zhang, Feng & Hao, Andy W. & Paul, Justin & Wang, Cheng Lu, 2020. "The determinants and performance of early internationalizing firms: A literature review and research agenda," International Business Review, Elsevier, vol. 29(4).
    7. Daniel R Clark & Dan Li & Dean A Shepherd, 2018. "Country familiarity in the initial stage of foreign market selection," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(4), pages 442-472, May.
    8. Jean-François Hennart & Antonio Majocchi & Birgit Hagen, 2022. "Correction to: What’s so special about born globals, their entrepreneurs or their business model?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(2), pages 377-377, March.
    9. Bai, Wensong & Holmström-Lind, Christine & Johanson, Martin, 2018. "Leveraging networks, capabilities and opportunities for international success: A study on returnee entrepreneurial ventures," Scandinavian Journal of Management, Elsevier, vol. 34(1), pages 51-62.
    10. Nataliya Galan & Ellinor Torsein, 2021. "Identification of international opportunities: A study of mature firms in mature industries," Journal of International Entrepreneurship, Springer, vol. 19(1), pages 53-103, March.
    11. Paul, Justin, 2020. "SCOPE framework for SMEs: A new theoretical lens for success and internationalization," European Management Journal, Elsevier, vol. 38(2), pages 219-230.
    12. Farhad Uddin Ahmed & Louis Brennan, 2019. "The impact of Founder’s human capital on firms’ extent of early internationalisation: Evidence from a least-developed country," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 615-659, September.
    13. Fletcher, Margaret & Harris, Simon & Richey, Robert Glenn, 2021. "Retrospective and prospective learning: Accelerating the internationalization process," Journal of World Business, Elsevier, vol. 56(3).
    14. Paul, Justin & Parthasarathy, Sundar & Gupta, Parul, 2017. "Exporting challenges of SMEs: A review and future research agenda," Journal of World Business, Elsevier, vol. 52(3), pages 327-342.
    15. Ciravegna, Luciano & Majano, Sara B. & Zhan, Ge, 2014. "The inception of internationalization of small and medium enterprises: The role of activeness and networks," Journal of Business Research, Elsevier, vol. 67(6), pages 1081-1089.
    16. Symeonidou, Noni & Bruneel, Johan & Autio, Erkko, 2017. "Commercialization strategy and internationalization outcomes in technology-based new ventures," Journal of Business Venturing, Elsevier, vol. 32(3), pages 302-317.
    17. Bembom, Michael & Schwens, Christian, 2018. "The role of networks in early internationalizing firms: A systematic review and future research agenda," European Management Journal, Elsevier, vol. 36(6), pages 679-694.
    18. Angélique Breuillot & Rachel Bocquet & Véronique Favre-Bonté, 2022. "Navigating the internationalization process: Strategic resources for early internationalizing firms," Journal of International Entrepreneurship, Springer, vol. 20(2), pages 282-315, June.
    19. Rubina Romanello & Maria Chiarvesio, 2019. "Early internationalizing firms: 2004–2018," Journal of International Entrepreneurship, Springer, vol. 17(2), pages 172-219, June.
    20. repec:osf:osfxxx:gaxhq_v1 is not listed on IDEAS
    21. Rimante Sedziniauskiene & Jurgita Sekliuckiene & Antonella Zucchella, 2019. "Networks’ Impact on the Entrepreneurial Internationalization: A Literature Review and Research Agenda," Management International Review, Springer, vol. 59(5), pages 779-823, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:98:y:2025:i:c:s1059056024008256. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.