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Personal Networks, Institutional Involvement, and Foreign Direct Investment Flows into China’s Interior

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  • Ying Qiu

Abstract

This article explores the relationship between informal and formal institutions and how their interactions shape the outcome of locational choices for foreign direct investment (FDI) in China’s interior. This is an important but neglected aspect of China’s economic development. The focus is on why FDI exists in host locations where the investment environment is poor and less competitive. Evidence from Shaanxi province suggests that the intertwined role played by personal networks and institutional involvement is a crucial part of the explanation. Networks are the key: at the individual/personal level, they are in the form of personal networks, and at the institutional/organization level, they take the form of institutional involvement. Moreover, the relationships among FDI, personal networks, and institutional involvement have a hierarchical structure: the larger the foreign parent firms, the more institutional involvement, while the smaller the foreign parent firms, the more personal networks are involved.

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  • Ying Qiu, 2005. "Personal Networks, Institutional Involvement, and Foreign Direct Investment Flows into China’s Interior," Economic Geography, Taylor & Francis Journals, vol. 81(3), pages 261-281, July.
    • Handle: RePEc:taf:recgxx:v:81:y:2005:i:3:p:261-281
    DOI: 10.1111/j.1944-8287.2005.tb00270.x
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    Cited by:

    1. Mark Lorenzen & Ram Mudambi & Andreas Schotter, 2020. "International connectedness and local disconnectedness: MNE strategy, city-regions and disruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(8), pages 1199-1222, October.
    2. Chenjian Zhang, 2022. "Formal and informal institutional legacies and inward foreign direct investment into firms: Evidence from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1228-1256, August.
    3. Mark Lorenzen & Ram Mudambi & Andreas Schotter, 0. "International connectedness and local disconnectedness: MNE strategy, city-regions and disruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-24.
    4. McDonald, Conor & Buckley, Peter J. & Voss, Hinrich & Cross, Adam R. & Chen, Liang, 2018. "Place, space, and foreign direct investment into peripheral cities," International Business Review, Elsevier, vol. 27(4), pages 803-813.
    5. Saras Sarasvathy & K. Kumar & Jeffrey G. York & Suresh Bhagavatula, 2014. "An Effectual Approach to International Entrepreneurship: Overlaps, Challenges, and Provocative Possibilities," Entrepreneurship Theory and Practice, , vol. 38(1), pages 71-93, January.
    6. Bas Karreman & Martijn J. Burger & Frank G. van Oort, 2017. "Location Choices of Chinese Multinationals in Europe: The Role of Overseas Communities," Economic Geography, Taylor & Francis Journals, vol. 93(2), pages 131-161, March.
    7. Canfei He & Yan Yan & David Rigby, 2015. "Regional Industrial Evolution in China: Path Dependence or Path Creation?," Papers in Evolutionary Economic Geography (PEEG) 1520, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2015.
    8. Lin, Jingyi & Plechero, Monica, 2019. "Global innovation networks for Chinese high tech small and medium enterprises: the supportive role of highly skilled migrants and returnees," Papers in Innovation Studies 2019/5, Lund University, CIRCLE - Centre for Innovation Research.
    9. Wenying Fu & Javier Revilla Diez & Daniel Schiller, 2017. "Determinants of Networking Practices in the Chinese Transition Context: Empirical Insights from the Pearl River Delta," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 108(2), pages 205-219, April.

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