Determinants of outward foreign direct investment by Chinese enterprises: An empirical study from institutional perspective

Abstract

Purpose

The paper aims to investigate the determinants of outward foreign direct investment (OFDI) by Chinese enterprises during China's institutional and economic transition, specifically from the institutional perspective.

Design/methodology/approach

An analytical framework was conceptualized by introducing several institutional‐based advantages peculiar to Chinese firms and a series of hypotheses developed regarding the influences of these advantages on the OFDI strategies of Chinese enterprises.

Findings

The findings confirm the specific institutional‐based advantages in terms of home government support, investor's financing capacity and host ethnic Chinese resources have salient impacts on OFDI behavior of Chinese firms, as predicted by initial hypotheses. Evidence from sub‐samples tests indicates there are varied determinant mechanisms for trade‐oriented, produce‐oriented, and other types of OFDI, respectively.

Originality/value

The paper offers two primary contributions. On one hand, by integrating conventional eclectic theory and Chinese institutional context, a series of novel hypotheses is proposed that highlights some specific institutional advantages Chinese outward investors could exploit. In this way, the paper provides an analytical framework useful for better understanding of internationalization of enterprises from other emerging and transitional economies.

Citation

Yan, D., Hong, J. and Ren, B. (2010), "Determinants of outward foreign direct investment by Chinese enterprises: An empirical study from institutional perspective", Nankai Business Review International, Vol. 1 No. 3, pp. 237-253. https://doi.org/10.1108/20408741011069188