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The Influence of Host-Country¡¯s Enviroments on the FDI Entry Mode Choice of Chinese Companies

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  • Song-Hua Hu
  • Hai-Yan Ma
  • Guang-Tao Zen

Abstract

Based on a sample of 280 China¡¯s listed companies with foreign direct investment (FDI) during 2005-2009, this paper examines how the country-specific factors influence these firms¡¯ FDI entry mode choice between mergers and acquisitions (M&As) and greenfield investment. Our results show that in the presence of higher country risk or more rapid economic growth, the Chinese enterprises prefer the greenfield investment. When the host country has stronger national innovation ability or a higher level of human capital, the enterprises tend to choose the entry mode of cross-border M&As. An increase in the cultural distance, excluding the effect of other variables, appears to induce the enterprises to select M&A entry mode. However, when factor endowments and other institutional environments are taken into consideration, the cultural distance produces no significant effect on FDI entry mode choice of these Chinese firms.

Suggested Citation

  • Song-Hua Hu & Hai-Yan Ma & Guang-Tao Zen, 2012. "The Influence of Host-Country¡¯s Enviroments on the FDI Entry Mode Choice of Chinese Companies," Business and Management Research, Business and Management Research, Sciedu Press, vol. 1(2), pages 39-47, June.
    • Handle: RePEc:jfr:bmr111:v:1:y:2012:i:2:p:39-47
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    References listed on IDEAS

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    Cited by:

    1. Wladimir Andreff, 2015. "Maturing Strategies Of Russian Multinational Companies: Comparisons With Chinese Multinationals," Post-Print halshs-01287431, HAL.
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    3. Agnieszka Glodowska & Bozena Pera & Krzysztof Wach, 2016. "The International Environment and Its Influence on the Entrepreneurial Internationalization of Firms: The Case of Polish Businesses (Miedzynarodowe srodowisko i jego wplyw na miedzynarodowa przedsiebi," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(62), pages 107-130.
    4. Farzan Yahya & Muhammad Rafiq, 2020. "Brownfield, greenfield, and renewable energy consumption: Moderating role of effective governance," Energy & Environment, , vol. 31(3), pages 405-423, May.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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