The Effects of Institutional Difference and Resource Seeking Intent on Location Choice of Chinese Outward FDI - Theoretical Economics Letters

TEL > Vol.8 No.5, April 2018

Theoretical Economics Letters

Volume 8, Issue 5 (April 2018)

ISSN Print: 2162-2078 ISSN Online: 2162-2086

Google-based Impact Factor: 1.34 Citations

The Effects of Institutional Difference and Resource Seeking Intent on Location Choice of Chinese Outward FDI ()

HTML XML

Download as PDF (Size: 450KB) PP. 981-1003

DOI: 10.4236/tel.2018.85068 1,028 Downloads 2,744 Views Citations

Author(s)

Yuanfei Kang^1*, Qian Li²

Affiliation(s)

¹Massey Business School, Massey University, Auckland, New Zealand.
²School of Economics and Management, Chang’an University, Xi’an, China.

ABSTRACT

This study seeks to explain how differences in political risk and economic freedom between host and home countries interact with investing firms’ resource-seeking intent to influence the firms’ outward foreign direct investment (FDI) location choice. Using panel data covering Chinese outward FDI in 62 host countries during the period of 2003-2014, we performed panel data regression analysis. The results show that when firms’ resource seeking intention is high, the FDI location choice is negatively associated with the differences in political risk, but positively associated with the differences in economic freedom between China and the host countries. The results also show that there is a substituting effect between political risk and economic freedom in their interactions with resource-seeking intent to influence FDI location choice. The findings suggest that the Chinese firms’ outward FDI location choice is a result of the interplay and the fit between the firms’ external legitimacy in the host countries and the firms’ internal legitimacy within the multinational organization.

KEYWORDS

FDI Location Choice, Resource Seeking Intent, Political Risk, Economic Freedom, Chinese Outward FDI

Share and Cite:

Kang, Y. and Li, Q. (2018) The Effects of Institutional Difference and Resource Seeking Intent on Location Choice of Chinese Outward FDI. Theoretical Economics Letters, 8, 981-1003. doi: 10.4236/tel.2018.85068.

Cited by

[1]	Do Institutional Quality and Natural Resources Affect the Outward Foreign Direct Investment of India?
	Jindal Journal of Business …, 2024

[2]	The Economic Benefits of Supporting Private Social Enterprise at the Nexus of Water and Agriculture: A Social Rate of Return Analysis of the Securing Water …
	Sustainability, 2022

[3]	The Economic Benefits of Supporting Private Social Enterprise at the Nexus of Water and Agriculture: A Social Rate of Return Analysis of the Securing Water for Food …
	Sustainability, 2022

[4]	Does institutional distance affect the risk preference of enterprises' OFDI: Evidence from China
	Managerial and Decision …, 2022

[5]	Does China's direct investment in ASEAN have institutional preference from the perspective of investment motivation heterogeneity?
	Journal of the Asia …, 2022

[6]	Do institutional risk preferences exist in Chinese direct investments in ASEAN countries? A case study of Chinese-funded enterprises in Laos
	2021

[7]	The Role of Top Management Team in Oversea Location Choice: Evidence from Chinese Firms' Investments in European Industrial Clusters
	2021

[8]	Location Choice of Overseas Investments in Transportation Infrastructure by Chinese Enterprises: From the Perspective of the “BRICS+” Mode
	2020

[9]	Exploring the potential determinants of Chinese OFDI towards OBOR nations: an application of gravity model
	2020

[10]	Research on the Influence of Internal Factors on the Quality of Decision-Making of MNCs
	2020

[11]	МОДЕЛІ МІЖНАРОДНОГО ІНВЕСТИЦІЙНОГО СПІВРОБІТНИЦТВА

	customer@scirp.org
	+86 18163351462(WhatsApp)
	1655362766

	Paper Publishing WeChat

Journals Menu

Home

About SCIRP

Service

Policies