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The influence of political risk, inertia and imitative behavior on the location choice of Chinese multinational enterprises: Does state ownership matter?

Diego Quer (Department of Management, University of Alicante, Alicante, Spain)
Enrique Claver (Department of Management, University of Alicante, Alicante, Spain)
Laura Rienda (Department of Management, University of Alicante, Alicante, Spain)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 16 July 2018

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Abstract

Purpose

Drawing on the institutional perspective, the purpose of this paper is to investigate how state ownership moderates the relationships between political risk, inertia and mimetic behavior, and the location choice of Chinese multinational enterprises (MNEs).

Design/methodology/approach

The authors argue that state ownership leads Chinese firms to behave toward political risk in an unconventional way, and that government support makes them less dependent on their own and other Chinese firms’ prior host country experience. The authors tested the hypotheses using data on outward foreign direct investment (OFDI) decisions made by 186 Chinese firms in 93 countries.

Findings

The authors found that Chinese state-owned enterprises (SOEs), compared to non-SOEs, are more likely to move into countries with high political risk, and that they are less likely to be inertial and mimetic.

Originality/value

Building on the distinction between macro- and micro-political risk, The authors contribute to the political risk literature by developing several arguments that explains why political risk varies across investing firms in a given host country. Moreover, this is one of the first studies of its kind to investigate the moderating effect of state ownership on the relationship between inertial and mimetic behavior, and the location choice of Chinese MNEs.

Keywords

Citation

Quer, D., Claver, E. and Rienda, L. (2018), "The influence of political risk, inertia and imitative behavior on the location choice of Chinese multinational enterprises: Does state ownership matter?", International Journal of Emerging Markets, Vol. 13 No. 3, pp. 518-535. https://doi.org/10.1108/IJoEM-11-2016-0298

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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