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Artificial Intelligence and Firms’ Outward Foreign Direct Investment: Evidence from Chinese Listed Companies

In: Proceedings of the 2025 7th International Conference on Economic Management and Model Engineering (ICEMME 2025)

Author

Listed:
  • Yuanlin Wu

    (Guangdong Mechanical and Electrical Polytechnic, School of Economics and Trade)

  • Hongxing Liang

    (Guangdong Mechanical and Electrical Polytechnic, School of Economics and Trade)

  • Xin Lian

    (Guangdong Mechanical and Electrical Polytechnic, School of Economics and Trade)

  • Huajun Zheng

    (Guangzhou Vocational University of Science and Technology, School of Economics and Management)

Abstract

This study investigates the impact of artificial intelligence (AI) application on the outward foreign direct investment (OFDI) of Chinese A-share listed firms from 2009 to 2023. Using a large panel dataset and a two-way fixed effects model, the empirical results demonstrate that AI application significantly reduces firms’ likelihood of undertaking OFDI. This negative effect remains highly robust after excluding major event years, removing municipality samples, constructing a balanced panel, and replacing the dependent variable with the scale of outward investment. Further heterogeneity analysis reveals that the suppressing effect of AI is more pronounced in non-state-owned enterprises, firms with high financing constraints, large firms, and those in technology-intensive industries. These findings suggest that AI strengthens firms’ domestic operational efficiency, thereby weakening the incentives for overseas expansion and reshaping internationalization strategies under digital transformation. The study provides micro-level evidence on the interaction between intelligent technologies and global expansion decisions and offers policy insights for balancing AI-driven efficiency gains with long-term internationalization goals.

Suggested Citation

  • Yuanlin Wu & Hongxing Liang & Xin Lian & Huajun Zheng, 2026. "Artificial Intelligence and Firms’ Outward Foreign Direct Investment: Evidence from Chinese Listed Companies," Advances in Economics, Business and Management Research, in: Touria Benazzouz & Sandeep Saxena & Hui Nee Au Yong & Nor Zafir Md Salleh (ed.), Proceedings of the 2025 7th International Conference on Economic Management and Model Engineering (ICEMME 2025), pages 135-147, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-602-9_14
    DOI: 10.2991/978-94-6239-602-9_14
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