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Establishment Mode by Chinese MNEs and the Positive Direction of Institutional Distance

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  • Diego Quer

    (Department of Management, University of Alicante, Spain. diego.quer@ua.es)

Abstract

Past research suggests that institutional distance has asymmetric impacts on the decisions of multinational enterprises (MNEs) depending on the direction of the distance. A positive distance refers to an institutionally more developed host country, while a negative distance denotes an institutionally weaker target country. Building upon the directionality logic of institutional distance, this article investigates these asymmetric effects in the case of emerging market MNEs from China. More precisely, it analyses the influence of a positive direction of institutional distance on the choice between acquisitions and greenfield investments. It also addresses the moderating effect of the Belt and Road Initiative (BRI) and state ownership. Drawing on a sample of 1,273 foreign direct investments by Chinese firms during 2013–2023, the findings suggest that Chinese MNEs are less likely to prefer acquisitions as positive institutional distance increases. Moreover, this negative association is lower in BRI countries and higher for state-owned enterprises.

Suggested Citation

  • Diego Quer, 2026. "Establishment Mode by Chinese MNEs and the Positive Direction of Institutional Distance," China Report, , vol. 62(1), pages 7-32, February.
    • Handle: RePEc:sae:chnrpt:v:62:y:2026:i:1:p:7-32
    DOI: 10.1177/00094455251392058
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    References listed on IDEAS

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