Three essays on Chinese outward investment

Yan Gao, University of Texas at El Paso

Abstract

Empirical research and theory development have traditionally focused on Western MNEs. The rise of multinational firms from the emerging markets, particularly MNEs from China has attracted limited empirical research attention. In the current research, I attempt to fill this gap by exploring the entry modes strategies, motivation and government interference when Chinese MNEs go abroad. Early international business theories suggested that firms invest abroad on the basis of possessing certain-firm specific competitive advantages. By leveraging these existing firm-specific advantages overseas, firms are able to generate sufficient returns to overcome the “liability of foreignness”. These early FDI theories were largely based on the experiences of western multinationals. In contrast to this perspective, Chinese MNEs appear to invest in both developing countries and advanced industrialized nations where they typically lack of competitive advantages. ^ My first essay explores the location choice of Chinese outward investment from both asset-exploitation and asset-exploration perspectives. I find that Chinese MNEs with aggressive market-seeking motives tend to invest in advanced industrialized nations, while Chinese MNEs with defensive market-seeking motives tend to invest in developing nations or newly industrialized nations. The results also show that Chinese MNEs tend to invest in advanced industrialized nations to acquired advanced technology. ^ In the second essay I explore diversification mode choices from asset-exploitation/exploration and organizational learning perspectives. I find that Chinese MNEs with aggressive market-seeking motives are more likely to choose Greenfield overseas investments, while those Chinese firms with defensive market-seeking motives are more likely to choose acquisitions. The results also show that Chinese MNEs with learning advanced management skills and acquiring advanced technology tend to enter foreign markets through acquiring existing overseas firms. ^ In the last essay I explore the impact of ownership type on the international performance of Chinese MNEs. China is characterized by three ownership types, SOEs, POEs and COEs. POEs are owned and operated by the central government. Because Chinese COEs possess both social network ties with the government while maintaining corporate entrepreneurial orientations, COEs typically have better international performance than either Chinese POEs or SOEs.^

Subject Area

Business Administration, Management|Economics, Finance

Recommended Citation

Gao, Yan, "Three essays on Chinese outward investment" (2009). ETD Collection for University of Texas, El Paso. AAI3371739.
http://digitalcommons.utep.edu/dissertations/AAI3371739

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