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The effect of executive incentives on FDI ambidexterity: Evidence from Chinese multinational enterprises

Zijie Li (University of International Business and Economics, Beijing, China)
Qiuling Gao (University of International Business and Economics, Beijing, China)
Kai Shen (China Communications Construction Group, Beijing, China)
Junyue Zhang (University of International Business and Economics, Beijing, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 25 September 2018

Issue publication date: 10 October 2018

535

Abstract

Purpose

This paper aims to examine different hypotheses concerning the effects of executive incentive on the degree of Chinese foreign direct investment (FDI) ambidexterity. Specifically, this study provides new insights on how executive equity incentive and executive control right incentive may affect overseas ambidextrous strategy of Chinese enterprises.

Design/methodology/approach

This study used panel data of Chinese manufacturing listed companies in 2006-2015 to explore the relationships between related factors. Hypotheses are tested by using regression analysis.

Findings

This study found that executive equity incentive is positively related to the degree of FDI ambidexterity. It also found that the level at which control right incentives of executive are made has a curvilinear relationship with degree of FDI ambidexterity. Higher level of control right incentive of executive will be associated with higher degree of FDI ambidexterity; however, beyond some level, higher control right incentive of executive will be associated with lower degree of FDI ambidexterity.

Research limitations/implications

This paper has implications to future research and companies’ everyday practice on ambidextrous FDI strategy.

Originality/value

Based on the principal-agent framework and incentive theory, this paper offers an interesting insight of achieving balance of ambidextrous strategy for Chinese multinational enterprises by involving the different roles of executive equity incentive and executive control right incentive they played.

Keywords

Acknowledgements

The authors thank their CMS reviewers for their valuable feedback and guidance throughout the review process. They also thank the financial support from the National Natural Science Foundation of China (Grant No. 71472038, 71772038), Beijing Social Science Fund (Grant No. 41314A21) and Scientific Research Innovation Fund for Postgraduates of University of International Business and Economics (Grant No. 2742017023).

Citation

Li, Z., Gao, Q., Shen, K. and Zhang, J. (2018), "The effect of executive incentives on FDI ambidexterity: Evidence from Chinese multinational enterprises", Chinese Management Studies, Vol. 12 No. 4, pp. 756-773. https://doi.org/10.1108/CMS-01-2018-0383

Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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