Journal
ASIA PACIFIC JOURNAL OF MANAGEMENT
Volume 39, Issue 3, Pages 1097-1123Publisher
SPRINGER
DOI: 10.1007/s10490-021-09756-y
Keywords
State ownership; Emerging market firms; Outward foreign direct investment; Political institutions; Economic institutions
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Funding
- National Natural Science Foundation of China [71972150]
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This study examines the moderating roles of political and economic institutions at the subnational and national levels in the link between state ownership and EMFs' OFDI. It finds that state ownership could either scale up or hinder OFDI for Chinese firms depending on the institutional development, political relationships, and market growth in host countries.
The extant literature offers inconsistent predictions and conflicting evidence regarding the relationship between state ownership and the internationalization of emerging market firms (EMFs). Drawing on institutional theory, we examine the moderating roles of political and economic institutions at the subnational and national levels in the link between state ownership and EMFs' outward foreign direct investment (OFDI). Based on a sample of 1421 OFDI projects involving 286 Chinese listed firms in 115 host countries between 2003 and 2016, we find that state ownership can scale up OFDI when Chinese firms are headquartered in subnational regions with high institutional development or low economic development, or when political relationships between home and host countries are amicable or market growth in a host country is slow; otherwise, state ownership hinders OFDI. These findings offer new insights into the relationship between state ownership and the internationalization of EMFs.
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