Natural disasters and MNC sub-national investments in China
ISSN: 1525-383X
Article publication date: 16 April 2020
Issue publication date: 19 June 2020
Abstract
Purpose
The purpose of this study is to examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different location portfolios can serve to mitigate investment risk.
Design/methodology/approach
The author sample includes data on 437 Fortune Global 500 firms and their initial entry into Chinese provinces between 1955 and 2008.
Findings
Using a fixed effects logit model of discrete time event history analysis, results show that geographic proximity to same multinational corporation (MNC) subsidiaries and different MNC subsidiaries from the same home country mitigates the negative effect of natural disasters on MNC entry into an affected province, while geographic proximity to other MNC subsidiaries from different home countries does not.
Originality/value
The knowledge needed to respond to severe disasters appears to be highly context-specific and shared only between firms with a high degree of commonality and trust.
Keywords
Acknowledgements
Financial support was partially provided by Social Sciences and Humanities Research Council of Canada (435-2013-0394). The authors like to thank Professor Canfei He, Professor, Peking University, for providing data on MNC subsidiary entry in China and Shuna Ho for her assistance on GIS mapping.
Citation
Oh, C.H., Oetzel, J., Rivera, J. and Lien, D. (2020), "Natural disasters and MNC sub-national investments in China", Multinational Business Review, Vol. 28 No. 2, pp. 245-274. https://doi.org/10.1108/MBR-02-2020-0044
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited