Comparative analysis of FDI by Indian and Chinese MNEs in Europe

Abstract

Purpose

Exploration of potential markets in foreign regions such as Europe becomes critical for emerging market multinational enterprises (MNEs). This study aims to investigate structural factors that affect the location choice of Chinese and Indian MNEs in Europe and compares them with USA and Japanese MNEs.

Design/methodology/approach

The authors use a holistic approach to identify possible configurations of the determinants of Indian and Chinese outward foreign direct investment (FDI) into 38 European countries. The authors test two configurations as follows: knowledge-seeking by Chinese and Indian MNEs in “non-predictable” markets; market-seeking by USA and Japanese MNEs.

Findings

The findings reveal several strategies deployed in Europe by Chinese and Indian MNEs that are more specific than the pure strategies identified in the literature (e.g. market-seeking, knowledge-seeking). More importantly, unlike USA and Japanese MNEs, the findings confirm a two-stage strategy hypothesis for Chinese MNEs in Europe. Additionally, they show that the quality of institutions and infrastructure underlies the attractiveness of a territory.

Research limitations/implications

Multilevel configurational research might have also been used to consider firm- and industry-level determinants.

Practical implications

Good governance positively affects the entire set of locational determinants. In addition, good infrastructure and institutions are necessary conditions for a country to attract FDI inflow.

Originality/value

Recent internationalization models have been useful in identifying drivers of FDI by emerging market multinational enterprises vs advanced market multinational enterprises in Europe. This study mobilizes a comparative configurational approach.

Citation

Avioutskii, V. and Tensaout, M. (2020), "Comparative analysis of FDI by Indian and Chinese MNEs in Europe", European Business Review, Vol. 32 No. 5, pp. 893-907. https://doi.org/10.1108/EBR-09-2019-0202