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Political risk, cultural distance, and outward foreign direct investment: Empirical evidence from large Chinese firms

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  • Diego Quer

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  • Enrique Claver
  • Laura Rienda

Abstract

The internationalization of Chinese enterprises is a subject that is receiving increasing attention in international business research. This paper analyzes the influence of political risk and cultural distance on the location patterns of large Chinese companies. Our results show some characteristics that differ from the conventional wisdom. A high political risk in the host country does not discourage Chinese multinationals. However, from a more conventional point of view, the presence of overseas Chinese in the host country is positively associated with Chinese outward foreign direct investment (FDI). In addition, firm size and the volume of Chinese exports to the host country have a positive influence. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • 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.
  • Handle: RePEc:kap:asiapa:v:29:y:2012:i:4:p:1089-1104 DOI: 10.1007/s10490-011-9247-7
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    References listed on IDEAS

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    Cited by:

    1. Klaus Meyer & Ornjira Thaijongrak, 2013. "The dynamics of emerging economy MNEs: How the internationalization process model can guide future research," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1125-1153, December.
    2. Katiuscia Vaccarini & Francesca Spigarelli & Ernesto Tavoletti, 2015. "European Green Tech FDI in China: The Role of Culture," Working Papers 1507, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.
    3. Wei, Yingqi & Zheng, Nan & Liu, Xiaohui & Lu, Jiangyong, 2014. "Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms," International Business Review, Elsevier, vol. 23(2), pages 356-370.
    4. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    5. 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.
    6. Alessia Amighini & Claudio Cozza & Elisa Giuliani & Roberta Rabellotti & Vittoria Scalera, 2015. "Multinational enterprises from emerging economies: what theories suggest, what evidence shows. A literature review," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(3), pages 343-370, September.
    7. Yuan, Ruizhi & Liu, Martin J. & Luo, Jun & Yen, Dorothy A., 2016. "Reciprocal transfer of brand identity and image associations arising from higher education brand extensions," Journal of Business Research, Elsevier, vol. 69(8), pages 3069-3076.
    8. Lv, Ping & Spigarelli, Francesca, 2015. "The integration of Chinese and European renewable energy markets: The role of Chinese foreign direct investments," Energy Policy, Elsevier, vol. 81(C), pages 14-26.
    9. Rania S. Miniesy & Eman Elish, 2016. "Is MENA Different? An Investigation of the Host Country Determinants of Chinese Outward Foreign Direct Investment," Working Papers 1024, Economic Research Forum, revised Jul 2016.
    10. Chensheng Xu & Feng Yao & Fan Zhang, 2015. "An Investigation of Confucius Institute’s Effects on China’s OFDI via Cultural Difference and Institutional Quality," Working Papers 15-45, Department of Economics, West Virginia University.
    11. Naveen Kumar Jain & Tanvi Kothari & Vikas Kumar, 2016. "Location Choice Research: Proposing New Agenda," Management International Review, Springer, vol. 56(3), pages 303-324, June.
    12. repec:eee:chieco:v:46:y:2017:i:c:p:142-164 is not listed on IDEAS
    13. Miloloža Helena, 2015. "Differences between Croatia and EU Candidate Countries: the CAGE Distance Framework," Business Systems Research, De Gruyter Open, vol. 6(2), pages 52-62, September.
    14. Demirbag, Mehmet & McGuinness, Martina & Akin, Ahmet & Bayyurt, Nizamettin & Basti, Eyup, 2016. "The professional service firm (PSF) in a globalised economy: A study of the efficiency of securities firms in an emerging market," International Business Review, Elsevier, vol. 25(5), pages 1089-1102.
    15. repec:eee:iburev:v:26:y:2017:i:5:p:908-926 is not listed on IDEAS

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