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Proposes that due to the worsening business environment in Taiwan in the 1980s many manufacturing enterprises, the majority being labour‐intensive small and medium‐sized enterprises (SMEs), were moving out to other developing countries. Explores how owner managers in the Taiwanese Electronic and Electric Appliances industry make a foreign direct investment (FDI) decision. Two semi‐structured questionnaires were designed to gather data about the respondents’ decision‐making processes. Field research was undertaken in Taiwan by personal interview over a period of three months and in total 35 companies participated. Discusses how a company’s internationalization experience and its size in terms of sales significantly influence the likelihood of a positive FDI decision. The likelihood of a positive FDI decision is also affected by owners’ personal characteristics. Additionally the decision makers appear to be influenced by friends and partners. States that the companies that make a positive FDI decision perceive the work ethic in Taiwan as deteriorating. Posits that 78 per cent of the most recent FDIs are in China: the major benefits being sought are low production costs and abundant labour supply. Says the most important reason for selecting China as the host country is the same language and cultural similarities. Explains that most FDIs are to produce products which have a price advantage; hence the FDI creates a vertical integration with the mother company in Taiwan. Seems that Taiwanese manufacturing SMEs will continue investing overseas to seek competitive advantages.

Aims to evaluate the determinants of international pharmaceutical firms’ foreign direct investments (FDI) in the Chinese pharmaceutical manufacturing industry. Focuses on comparing the differences in FDIs between early entrants who started FDI before 1992 and the late entrants whose FDI started after 1992 in China. Field research was mainly conducted in China by personal interview as well as mail questionnaires over a period of three months in 1999 and 44 companies participated in total. The results of index of dissimilarity analysis, t‐test and Wilcoxon test consistently show that both early and late entrants are likely to agree that China’s huge market size played the most important role in motivating international pharmaceutical firms’ FDI in China. The results did not support the traditional FDI theories on domestic market imperfection and firm specific advantages.